special report by fdli...a failure to conduct any release testing for the products that they were...

SPECIAL REPORT BY FDLI

AUTHOR:Jerry Chapman

PUBLISHED BY:Govzilla 6800 Koll Center Pkwy, Suite 120, Pleasanton, CA [email protected]: +1 (512) 423-1718

Govzilla, Inc. @2020, All Rights Reserved

© 2020 Govzilla. All rights reserved. pg. 1

Special Report from FDLI

Following is Special Report from the Food and Drug Law Institute (FDLI) Enforcement, Litigation, and Compliance Conference held in Washington, DC in December 2019, written by Jerry Chapman, Senior GMP Quality Expert at Govzilla. Presentations by CDER, CDRH, CBER, and DOJ senior management on 2019 accomplishments, trends, and concerns are covered in detail. Included are links to relevant documents, such as warning letters and guidance documents.

Table of Contents

Title Page Number

CDER Update: FDA Firsts in 2019: First-of-a-Kind Drug GMP Warning Letters and More to US Than Foreign Firms

1

CDRH Update: CDRH Reorganization Takes a Total Product Lifecycle Approach; MDSAP, ISO Adoption, and Collaboration with MDIC Moving Forward

7

CBER Update: Human Cell and Tissue Therapy Enforcement Actions Target Unapproved New Products Making Unsubstantiated Claims

16

Consultant Perspective on CBER Compliance: Avoiding and Reacting to Human Tissue, Cell and Gene Therapy Enforcement Actions: Communication is Key

22

DOJ Update: Department of Justice Consumer Protection Branch Doubles in Size to Battle Fraud and Deception in the Drug and Dietary Supplement Industries (Parts 1 and 2)

25, 28

__________________________________________________________________________________

FDA Firsts in 2019: First-of-a-Kind Drug GMP Warning Letters and More to US Than Foreign Firms

In FY 2019, FDA’s enforcement actions included a number of firsts—for example: the first time in nearly a decade that the agency issued more drug GMP warning letters to sites in the United States than to those overseas; the first warning letter jointly issued by the Center for Drug Evaluation and Research (CDER) and the Drug Enforcement Administration (DEA); and the first warning letter issued for violations of the Drug Supply Chain Security Act (DSCSA).

At the Food and Drug Law Institute (FDLI) Enforcement, Litigation, and Compliance Conference held in Washington, DC in December 2019, CDER Office of Compliance (OC) Director Donald Ashley reviewed these and other firsts from FY 2019.

In addition to a warning letter analysis and discussion of “a few significant enforcement actions” the agency took in FY 2019, Ashley discussed changes to the Drug Registration and Listing System (DRLS), the proactive promotion of compliance, changes in the regulation of homeopathic medicines, and his team’s use of operational excellence tools to streamline its warning letter classification and completion of regulatory actions processes.

Areas of concern targeted in warning letters and other compliance actions included:

● a pattern of manufacturers with compliance issues in a specific supply chain


● online opioid sales

● wholesale distribution

● compounding pharmacies, and

● cannabidiol (CBD) products.

Why the Change?

Regarding the warning letters, Ashley emphasized that CDER Office of Compliance “tries, whenever possible, to identify and execute those regulatory and enforcement actions that have the greatest impact on public health.” In FY2019, it issued 98 warning letters, including 54 to domestic facilities, 17 to facilities in India, and to 14 facilities in China, marking the first time in nearly 10 years that more drug GMP warning letters were given to U.S. firms as compared to non-U.S. firms.

“Why the change?” Ashley asked. “Well, we are not entirely sure, but it was likely the result of a number of factors.” For example, in FY 2017 and FY 2018 his office substantially completed inspecting and evaluating facilities that had never previously been inspected. Many if not most of those facilities were located overseas. And “the worst of those were placed on import alert” resulting in their not being inspected again until they remediate their facilities and processes.

Also, in FY 2019, more than 60% of the drug GMP warning letters his office issued went to facilities that were being inspected for the second or more times rather than facilities that had been inspected the first time, which is different than the previous year. In FY 2018, more than 60% of the warning letters were to facilities that had been inspected for the very first time.

Lastly, Ashley pointed out, “it appears to us that the distribution we are seeing for CGMP [current good manufacturing practice] warning letters in FY 2019 more closely approximates the distribution of facilities by country in our inventory.”

Pervasive Supply Chain Issues at Dollar Tree Prompt Warning Letter

Warning letters to Dollar Tree’s parent company for issues with non-compliance by suppliers and to McKesson regarding its distribution practices were both the first of their kind. However, each has its own unique circumstances and needs to be examined in more detail to get the true picture.

The warning letter given to Greenbrier International d/b/a Dollar Tree was for receipt of adulterated drug products in violation of section 301(c) of the FD&C Act. “The key fact here is that we observed a pattern of manufacturers with seriously egregious CGMP violations in Dollar Tree’s supply chain over a course of several years,” Ashley emphasized.

The violations in the warning letters issued to the manufacturers in Dollar Tree’s supply chain include a variety of offenses, such as:

● a failure to conduct any release testing for the products that they were selling in interstate commerce

● a failure to conduct raw material inspection on the ingredients used to make these over-the-counter products, and


●the presence of rodent feces in a facility.

These manufacturers were all issued warning letters and placed on import alert. The Chief Operating Officer of Greenbrier was copied on the warning letters issued to these manufacturers. The warning letter to Greenbrier is significant because it is the first time that the Office of Manufacturing Quality, which is part of the Office of Compliance, issued a warning letter to a drug distributor for a violation of section 301.

“This should serve as a reminder to distributors that, although a distributor may not be subject to CGMP requirements themselves, they are responsible for ensuring that the drugs that they distribute in interstate commerce are not adulterated,” Ashley commented.

However, he provided a caveat that all distributors should not now expect to receive section 301 warning letters from FDA. “I really want to emphasize that this letter came after FDA repeatedly flagged CGMP problems over at least a three-year period and an inspection of the laboratory operated by Dollar Tree’s corporate headquarters.”

McKesson Draws First Warning Letter Citing DSCSA

In February, FDA issued its first warning letter for violations of the Drug Supply Chain Security Act (DSCSA) to the McKesson Corporation, one of the largest wholesale drug distributors in the United States. The DSCSA was enacted by Congress and signed into law in late 2013.

Under DSCSA, manufacturers, repackagers, wholesale distributors like McKesson, and dispensers that are primarily pharmacies are required to have systems in place to quarantine and investigate suspect and illegitimate product, which, if they got into the supply chain, are especially dangerous situations to consumers.

During an inspection at McKesson, FDA observed that the firm did not perform the required steps when notified by trading partners that they may have distributed illegitimate products. “Given McKesson’s significant product volume,” Ashley pointed out, “you can imagine these violations could have tremendous adverse consequences on public health.”

He said, “the most concerning issues” identified during the FDA inspection included inadequate record-keeping, inadequate response to illegitimate product notifications from trading partners, failure to quarantine and investigate suspect product, and failure to make notifications to trading partners themselves.

“We continue to work with McKesson to review the corrective actions that they have put into place since receiving the warning letter and the new systems they have put into place to avoid similar violations in the future. And we will continue to monitor the supply chain generally for compliance with these important requirements under the DSCSA,” Ashley said.

Joint Warning Letters with Other Agencies a First

In FY 2019, CDER issued joint warning letters with the DEA regarding opioids and with the Center for Food Safety and Applied Nutrition (CFSAN) and the Center for Veterinary Medicine (CVM) for issues regarding CBD products.

https://govzilla.com/blog/2019/02/pharma-why-did-mckessson-receive-the-first-wl/


While CDER has collaborated with DEA in the past, this is the first time a joint warning letter has been issued. In September, the agencies partnered to issue joint warning letters targeting four online networks that were illegally distributing opioids in violation of both the FD&C Act and the Controlled Substances Act.

“You know if you have been following this that we have been quite active in tackling the access to opioids online the last several years,” Ashley commented. “And these joint actions represent our amplified response to combatting the opioid crisis that has taken so many lives in the U.S. It also demonstrates our commitment to enhance inter-agency collaboration to address the public health emergency.”

In November 2019, a joint effort between CDER, CFSAN, and CVM resulted in the issuance of warning letters to 15 companies that were illegally selling CBD products in violation of the FD&C Act. The action demonstrates FDA’s ongoing efforts to monitor the marketplace and act as needed against companies that violate the law in ways that raise public health concerns.

“As a general matter, FDA is concerned that people may mistakenly believe that CBD cannot hurt them,” Ashley stressed. “The limited data that FDA has seen about CBD safety points to real potential risks, including liver injury, adverse drug interactions, and male reproductive toxicity, which has been specifically observed in animal studies involving CBD.”

“We are also particularly concerned at CDER in the marketing of unapproved CBD products with unapproved claims to treat serious diseases as well as the marketing of these unapproved products for use in all populations including infants and children. The companies that we targeted in this latest group of warning letters included several companies that were targeting infants and children with CBD products.”

While FDA continues to evaluate its approach to address the regulation of products made from CBD, this round of warning letters reinforces its commitment to protecting consumers from potentially harmful CBD products.

Compounding Pharmacies and Homeopathic Products Draw Agency Focus

Ashley summarized the CDER Office of Compliance’s risk-based enforcement strategy. “I think the best example of our efforts to identify and execute regulatory enforcement actions with the greatest impact on public health have been our efforts to seek injunctive relief against drug products presenting the greatest risk of harm in patients,” he said. He pointed specifically to the compounding industry.

The scope and severity of the quality and safety concerns the agency has continued to see in the compounding industry “pose a major public health challenge.” In FY 2019, CDER secured permanent injunctions against four compounding companies purportedly making sterile drug products that were adulterated because the drugs were made under insanitary conditions and/or in violation of CGMP requirements. These four compounders were:

● Ranier Rx in Pennsylvania

● Guardian Pharmacy Services in Texas

● PharMedium Services at multiple sites, and


● Pharm D Solutions, also located in Texas.

This is on top of injunctions that were obtained in conjunction with colleagues at the Justice Department and the Office of Chief Counsel at FDA against two compounders in FY 2018, specifically Delta Pharma in Mississippi and the Cantrell Drug Company in Arkansas.

CDER has also increased its focus on homeopathy, as that industry “continues to grow in leaps and bounds,” according to Ashley. In October, the agency issued a revised draft guidance that details a risk-based enforcement policy prioritizing certain categories of homeopathic products that could pose a higher risk to public health. It includes products with routes of administration other than oral and topical, products that are marketed to vulnerable populations such as infants and children, and products with significant quality issues.

At the same time, it withdrew Compliance Policy Guide (CGP) 400.400, Conditions Under Which Homeopathic Drugs May be Marketed.

“Since that CPG was issued in 1988,” Ashley explained, “we have seen a number of cases in which homeopathic drug products posed significant risk to patients even though they appeared to meet the conditions described in the CPG.”

As a result of the agency’s ongoing evaluation of its regulatory framework in the homeopathic product space, including consideration of the “substantial” public input that it has received on the issue and the recent growth of safety concerns associated with these products, “we felt it was appropriate to withdraw the CPG at this time. In short, CGP 400.400 is inconsistent with the agency’s risk-based approach to enforcement generally, and it does not accurately reflect the agency’s current thinking.”

CDER Making Headway on Closing Inspections and Assigning Outcomes

CDER is making headway on its Concept of Operations (ConOps) initiative in collaboration with colleagues at FDA’s Office of Regulatory Affairs (ORA) in formal efforts to streamline facility evaluation and inspection outcome processes in the human drug inspection program.

The initiative has target dates for two activities: issuing a facility classification decision—voluntary action indicated (VAI) or official action indicated (OAI)—and completing all regulatory actions associated with facilities that are classified as OAI.

The target for issuing a final facility classification decision is 90 days. The classification will be communicated to the facility owner by way of a letter. The target for completing OAI regulatory actions is six months.

In FY 2019, FDA issued 839 classification letters and 86% of these, or 719, met that 90-day target, which was up from 82% the previous year.

Regarding OAI regulatory actions, in FY 2019 the median time from the end of an inspection to the issuance of a warning letter decreased to 6.5 months, an overall improvement of 44% since FY 2015 when the median time was 11.6 months (see Figure 1).

(continues next page)


Figure 1: Number of Warning Letters and Time to Issue from Inspection Close

Efforts to Keep the FDA Drug Registration and Listing Up to Date Showing Success

In August 2019, CDER issued a notice of intent to inactivate drug listing records that were not certified as being accurate and up-to-date or were associated with a manufacturing establishment that is not currently registered with FDA.

When a firm fails to comply with the registration and listing requirements, the registration database contains incomplete and inaccurate information that compromises the agency’s ability to rely on it to support programs and activities such as drug recalls, drug establishment inspections, post-marketing surveillance, and counter-terrorism.

As of mid-November, CDER inactivated over 15,000 NDCs. The NDC (National Drug Code) is a unique numeric identifier given to each medication. The intent for the future is to inactivate uncertified human drug listings every January and July as described in the Federal Register Notice.

Ashley advised companies to go into the electronic Drug Registration and Listing System (eDRLS) and update or certify their registration and listing entries.

Compounding Center of Excellence CDER Outreach Effort Aims to Shore Up Compliance

Ashley detailed his office’s latest effort to “proactively support compliance” and “look for opportunities to pursue transformative stakeholder engagement and collaboration”—a “Compounding Quality Center of Excellence.”

The goal of the center is to enhance engagement with outsourcing facilities, to help the industry bolster the quality of the compounded drugs they produce and thereby reduce the potential risk of harm that


may arise from using these products. CDER executed a contract and began work in September 2019 in order to lay the groundwork for the Center of Excellence.

The contract includes the planning and development of both in-person and web-based training for every outsourcing facility located in the United States, on all aspects of quality compounding as well as important information regarding compliance with specific regulatory requirements. That will include a large end-of-the-year conference for all outsourcing facilities as well.

Links

Greenbrier International, Inc d/b/a Dollar Tree Warning Letter

McKesson Corporation Warning Letter

FDA Draft Guidance: Drug Products Labeled as Homeopathic

Federal Register Notice: Drugs Intended for Human Use That Are Improperly Listed Due to Lack of Annual Certification or Identification of a Manufacturing Establishment Not Duly Registered With the Food and Drug Administration; Action Dates

__________________________________________________________________________________

CDRH Reorganization Takes a Total Product Lifecycle Approach; MDSAP, ISO Adoption, and Collaboration with MDIC Moving Forward

The FDA Center for Devices and Radiological Health (CDRH) has undergone a major reorganization reflective of a total product lifecycle (TPLC) approach―a product-focused review for each product area that covers all the programs in the lifecycle of a device under the same management chain, allowing a 360° view of a product for the agency management and the reviewers.

Part of the reorganization includes the creation of a Super Office―the Office of Product Evaluation and Quality (OPEQ)―that includes seven product-specific review offices and two supporting offices. One of the supporting offices is the Office of Regulatory Programs (ORP) that includes the traditional pre-market review programs, compliance, and surveillance programs.

Despite the time and energy needed to undertake a massive reorganization, international collaboration programs―such as the Medical Device Single Audit Program (MDSAP), adoption of ISO 13485:2016 quality management standard, and collaboration with the Medical Device Innovation Consortium (MDIC) to drive continuous improvement―continue to move ahead.

At the Food and Drug Law Institute (FDLI) Enforcement, Litigation, and Compliance Conference held in Washington, DC in December 2019, CDRH Associate Director of Compliance and Quality Erin Keith reviewed CDRH’s recent reorganization, including where various functions now reside in the office, and key changes in the way CDRH has shifted its focus.

Keith began by sharing the current CDRH organizational chart, which was finalized in October 2019. She pointed out two new offices that are the result of programs and functions that were spun out of the Office of the Center Director―the Office of Policy, and the Office of Strategic Partnerships and Technology Innovation (see Figure 1).

https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/greenbrier-international-inc-dba-dollar-tree-574706-11062019

https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/mckesson-corporation-headquarters-2719-565854-02072019

https://govzilla.com/wp-content/uploads/2020/03/28055831dft.pdf

https://www.federalregister.gov/documents/2019/08/14/2019-17436/drugs-intended-for-human-use-that-are-improperly-listed-due-to-lack-of-annual-certification-or




Figure 1.

Familiar offices that were retained in the reorganization are the Office of Communication and Education, the Office of Management, and the Office of Science and Engineering Laboratories.

Where Did the Familiar Offices Go?

Keith pointed out that there are a few offices people have been “used to interacting with” that are missing. These include the Office of Device Evaluation, the Office of In Vitro Diagnostics and Radiological Health, the Office of Compliance, and the Office of Surveillance and Biometrics. As part of the reorganization, the regulatory responsibilities of these offices now reside in OPEQ (see Figure 2).



Figure 2.

Keith explained that CDRH “has a lot of experience with the Total Product Lifecycle (TPLC) Office,” having created its first one in 2002 around a specific product―the Office of In Vitro Diagnostics. In that case, all the pre-market review, compliance review, and medical device reporting (MDR) review functions for in vitro diagnostics were combined into one office under a single management team.

The total product lifecycle regulatory approach, she explained, “allows people to see the lifecycle of activities associated with a product and use the appropriate tool―whether it is a formal official compliance activity, a pre-market activity, or a post-market surveillance communication activity―in order to push the industry in the right direction and ensure that safe and effective medical devices are available.”

OPEQ has seven offices “that are like that original TPLC Office.” These are called Offices of Health Technology, and each is product-focused, as reflected in the OPEQ organization chart (see Figure 3).



Figure 3.

OPEQ also includes two supporting offices―the Office of Clinical Evidence and Analysis (OCEA), and the Office of Regulatory Programs. OCEA is responsible for and houses all CDRH’s clinical evidence programs, including the Investigational Device Exemption (IDE) program, its clinical trials program, Bioresearch Monitoring (BIMO) program, and the biostatistics program.

The Office of Regulatory Programs (ORP) is the repository of all the other regulatory programs that the Office of Product Evaluation and Quality is responsible for. This includes the traditional pre-market review programs, the traditional compliance programs, and the surveillance programs.

The reorganization added a new layer with OPEQ in addition to the Center. “But we have addressed this,” Keith said, “by streamlining our decision making and pushing some of the decision making for our programs to the lowest most appropriate level. So just because there is an organizational layer does not mean it is part of the oversight of the work functions.”

She described the move to a team structure as “intentional,” explaining that it has to do with “the intricacies of making changes to organizational structures within the government, and particularly in a regulator of industry. This allows us to make changes at a much faster rate should we need to.”

Compliance and Review Functions Now in OPEQ

CDRH has instituted a matrix structure for the compliance and quality programs at CDRH. As a result, there are multiple offices involved in the implementation of the compliance program.


The Office of Clinical Evidence and Analysis, OCEA, is responsible for the BIMO programs and the actual implementation of the programs. The people who do the reviews, write the warning letters or untitled letters or interact with those who have been the subject of an inspection are in OCEA.

ORP is where the traditional compliance program operations are housed, such as Registration and Listing, the Inspection and Audit Programs, Imports and Exports, and Recalls. The Market Review Programs as well as the Medical Device Reporting Program are also housed there.

The Offices of Health Technology―the OHTs―are where the traditional review functions across the lifecycle occur (see Figure 4). That includes the compliance program. They do the reviews associated with classifying an Establishment Inspection Report (EIR) and making the decisions about whether to issue a compliance action associated with that classification.

Figure 4.

The OHTs perform virtually all the functions for the respective product type―for example, they classify recalls. They assess allegations to determine if there is appropriate follow-up that is necessary with what has been submitted to the agency. They are involved in determining if a regulatory meeting is necessary in order to bring a company into compliance. They are involved in more advanced casework when that happens―for example, cases that are related to injunctions, civil money penalties or seizures, or cases that the Department of Justice (DOJ) takes in the criminal division.

The Immediate Office at OPEQ also has a function in the compliance program. It is responsible for new compliance and quality policy development, as well as consistent application of that policy throughout the organization, enforcement strategy development, and strategic program development.

Keith provided two slides that cover contacts in the Immediate Office―contacts that are appropriate in the Office of Regulatory Programs (a link to the contact list is attached at the end of this article). “I want


to point out that each of the division directors noted here has some aspect of CDRH’s prior compliance program responsibilities. So even though there is one that says Submission Support that relates to PMA’s, 510k’s, and Denovos as an example, they also have functions that were the responsibility of the compliance programs in the past. For example, device tracking is managed through this group and so is the custom device program.” There is also a contact for the BIMO Program.

Each of the individual OHTs has a lead for the compliance program. This is a member of the leadership team at the office level―a deputy director, an associate director, or an office director. “It is most appropriate to reach out to them if it is a product specific issue that you want to discuss,” she emphasized. “Note that OHT7, the Office of In Vitro Diagnostics and Regulatory Health, has two contacts. That is because it covers two primary program areas, In Vitro Diagnostics and Radiological Health.”

MDSAP and ISO Harmonization Efforts Progressing

Keith emphasized that even during a major reorganization, work with international partners has continued, specifically with the Medical Device Single Audit Program (MDSAP) and the adoption of ISO 13485:2016.

MDSAP is a joint program that FDA participates in that was developed by the International Medical Device Regulators Forum (IMDRF), an international device harmonization group. It is a single audit that meets regulatory needs in five markets. It is used by Australia, Brazil, Canada, Japan, and the United States. The number of MDSAP audits has been increasing since 2014 (see Figure 5).

Figure 5.

The EU recently announced that it has instituted a task force to assess how it can use the MDSAP audit report for regulatory purposes in the EU. “That is a big step for us,” Keith explained. “We have had a lot


of interaction with the EU over the years trying to have it participate in this program. There is a lot of value in bringing them into this and having a single audit across that market as well.”

FDA uses the MDSAP audit in exchange for a routine surveillance inspection. “It allows us to screen out companies with a high probability of compliance with our requirements and focus on those companies that have a lower probability of compliance―to find more of those companies and help them become compliant.”

The other big harmonization activity on the agenda is the adoption of ISO 13485:2016. CDRH announced via the unified agenda its intent to adopt ISO 13485:2016 to meet regulatory requirements in the quality management system space. The agency anticipates issuing a proposed rule in the summer of 2020 (link provided below).

The revisions will supplant the existing requirements with the specifications of ISO 13485:2016 and help harmonize domestic and international requirements. This approach is consistent with and complements MDSAP.

Medical Device Quality in Focus

Keith emphasized that all CDRH’s regulatory programs “at their heart” are intended to ensure that there are high quality, safe and effective medical devices available in the United States. The compliance program is no exception.

In 2011, CDRH “took a very hard look at how successful our compliances programs were at producing the desired goal as demonstrated by a high degree of compliance with our quality system requirements,” she explained. “What we noticed was that from year to year we had basically the same results. We had the same percentage of companies that were compliant, the same percentage of companies that had a little bit of a problem but we were confident that they could fix it, and then the same percentage of companies that were non-compliant and we had to deal with.”

The data showed that the Center’s compliance program is “very effective at dealing with individual companies, helping them become aware of their non-compliance and working towards becoming compliant. But it was not being successful in moving the overall arc of the industry into a more consistent high level of compliance and therefore producing higher quality products,” the OPEQ Associate Director for Compliance and Quality commented.

CDRH decided to take a different approach and enhance its traditional compliance and enforcement model with programs that focus on quality and process improvement within a company. “This is different for us,” Keith said. “It is not an enforcement action. There is not an enforceable requirement for a company to improve. You must meet the requirements, but you do not have to get better.”

However, continual improvement is an accepted principle within quality management systems, adopted by many industries around the world such as the motor vehicle industry, banking, and a whole host of industries. It has become very common and is a requirement in a lot of other quality management systems standards that are not medical device-specific. In the pharma world it is guided by ICH Q10, the Pharmaceutical Quality System.


CDRH is partnering with the Medical Device Innovation Consortium (MDIC)―a public/private partnership that FDA is a member of, as are other government organizations, industries, and other stakeholders in the medical device community, including payers, providers, and patients.

The aim was to develop a program that would voluntarily push the concepts of making decisions based on improving quality and prioritizing compliance and patient outcomes instead of simply achieving compliance with the regulatory requirements and documenting them.

Working with MDIC, CDRH developed a third-party appraisal program that assesses the relative maturity level of a company’s quality management system with a goal of driving continuous improvement and achieving organizational excellence. CDRH then took that program and created a pilot program in its pre-market space and applied it to the Premarket Approval (PMA) Humanitarian Device Exemption (HDE) program’s 30-day notice submissions.

“What we did was take a scorecard of information that came from that third-party appraisal of a company, along with a reduced set of information compared to a traditional 30-day notice and committed to a reduced review timeframe to make a decision on that information,” Keith explained.

“In order to participate in this, one of the key things that was important for the company was that they had to have a history of regulatory compliance. We had to have confidence that their quality management system was doing what it was supposed to do.”

The Capability Maturity Model Integration (CMMI) Institute is the third-party organization that manages the appraisal process. Surveys and feedback from the participants to CMMI indicate that “a huge percentage of the companies are very happy to have participated―that they see value in the process improvements that they have been able to make and can tie that to improvements in quality with their products,” Keith said.

“As a result,” she pointed out, “we are very big on this program and we plan to move this Case for Quality pilot into a permanent program and operationalize CDRH’s case for quality pilot this year” (see Figure 6).



Figure 6.

CDRH is also working with MDIC to develop a pilot program around the appraisal concept and voluntary improvement for companies that are non-compliant. The aim is to assess the ability of the appraisal process and internal assessment of how well a firm’s quality system is functioning and its decision making is being implemented to see if it will have an impact on the participant’s ability to return to a compliant status.

In closing, Keith said the Center prefers not to use enforcement tools. Its preference is to get to the problems when they are smaller and easier to fix.

“We think that the adoption of our TPLC model, the harmonization activities that we are involved in, and the use of Case for Quality voluntary pilots will help push the needle in the industry to a better place, so that there will be fewer compliance problems and therefore far fewer enforcements.”

Q&A Focuses on Declining CDRH Warning Letters

During the Q&A following Keith’s presentation, an audience member asked if she could explain why the number of warning letters issued by CDRH has declined in the last several years.

Keith replied, “I think a lot of it has to do with our intent to reorganize. And to that, it was very disruptive to the compliance process. It was organized in a way that was different now than it was in the past and so the processes had to be worked out a little bit more. We wound up with some time wrecks because of it.”

“We cannot issue a warning letter if we do not do it timely according to the evidential requirements. We need to make sure that when we issue a warning letter, we do so within 120 days of the closing of


the inspection. If we miss that, then we wind up issuing more untitled letters than we issue warning letters. Or we issue ‘It has come to our attention’ letters if we cannot support an untitled letter.”

The moderator asked if the 120 days is a CDRH policy or whether it applies more broadly, to which Keith replied more broadly.

The moderator asked about the number of consent decrees during the same timeframe.

“Without getting to that stage first, that warning letter of prior notice, you do not get to the stage of Consent Decree, should somebody be in the condition of lack of compliance with the requirements,” Keith replied.

“I would say that our goal is voluntary compliance versus anything involving enforcement. It is easier on us, it is easier on the companies. We see faster resolution with those things than we do with a formal Consent Decree. However, if somebody is a slow learner and is not going to voluntarily comply, we will take the next step.”

Links

OPEQ Compliance and Quality Program Contacts Unified Agenda: Harmonizing and Modernizing Regulation of Medical Device Quality Systems ICH Q10 CDRH Case for Quality

__________________________________________________________________________________

Human Cell and Tissue Therapy Enforcement Actions Target Unapproved New Products Making Unsubstantiated Claims

FDA’s Center for Biologics Evaluation and Research (CBER) is overcoming daunting challenges in its enforcement of laws and regulations in the area of human cells, tissues, and cellular and tissue-based products (HCT/Ps) that are being sold without the required FDA approval.

While some companies are submitting applications to CBER seeking agency approval for marketing HCT/Ps, others are marketing and administering products they claim will treat various diseases and life-threatening conditions—including cancer, amyotrophic lateral sclerosis (ALS), Alzheimer’s, autism, arthritis, stroke, Multiple Sclerosis (MS), macular degeneration, Parkinson’s disease, chronic obstructive pulmonary disease (COPD), and many others—without proof of the claims and without agency approval.

At the Food and Drug Law Institute (FDLI) Enforcement, Litigation, and Compliance Conference held in Washington, DC in December 2019, CBER Office of Compliance and Biologics Quality Deputy Office Director Melissa Mendoza reviewed the challenges her office is facing and the enforcement and litigation actions the center took in 2019.

The intention, she said, is for compliance and enforcement efforts to be impactful. Enforcing the regulations against the bad actors is “critical to the legitimacy of the entire field. We want to encourage those who follow the rules to keep following them. And we want patients who are considering enrolling in a clinical trial to not be swayed by the allure of an unsubstantiated claim that they could be cured right now. We certainly want those clinical studies to be under FDA’s oversight.”

https://govzilla.com/wp-content/uploads/2020/04/OPEQ-Compliance-and-Quality-Program-Contacts.pdf

https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=201904&RIN=0910-AH99

https://www.ema.europa.eu/en/documents/scientific-guideline/international-conference-harmonisation-technical-requirements-registration-pharmaceuticals-human_en.pdf

https://www.fda.gov/medical-devices/quality-and-compliance-medical-devices/case-quality


Enforcement Discretion Ends November 2020

FDA defines HCT/Ps in 21 CFR Part 1271 as “articles containing or consisting of human cells or tissue that are intended for implantation, transplantation, infusion, or transfer into a human recipient.” There are two broad categories of HCT/Ps with very different regulatory requirements, defined under sections 351 and 361 of the Public Health Services Act (PHSA).

Which section a product falls under can be a source of confusion, specifically regarding the interpretation of the terms “minimal manipulation” and “homologous use.” An HCT/P regulated solely under Sec. 361 has very specific properties and does not require an IND or pre-market approval—the company or individual simply needs to declare that they meet the description of a 361 product.

There are those who think they meet the 361 requirements and market a product without agency approval but find out later that the agency disagrees. [Editor’s Note: The requirements for a section 361 product are included in 21 CFR 1271.10.]

To better define the 361 and 351 requirements, CBER released a guidance in November 2017, “Regulatory Considerations for Human Cells, Tissues, and Cellular and Tissue-Based Products: Minimal Manipulation and Homologous Use.”

In order to allow manufacturers of products time to comply with new requirements for HCT/Ps introduced in 2017, for the first 36 months following issuance of the final guidance document FDA has exercised “enforcement discretion” for certain products that are subject to the agency’s premarket review under the existing regulations but are not currently meeting those requirements. FDA does not exercise that discretion for products that pose a potentially significant safety concern.

Regarding products that require FDA approval but are being sold without it sometimes quietly and locally, at the FDLI meeting Mendoza commented, “It is unfortunate, but firms are getting creative, and we are in hot pursuit of them.”

In November 2019 CBER issued 20 of what it is referring to as “It’s Come to Our Attention” letters. These letters inform various healthcare practitioners, clinics, and others that its “enforcement discretion” for certain HCT/Ps is coming to an end in November 2020. The letters also highlight CBER’s regenerative policy framework and provide links to some information and ways to engage with FDA. The Center has issued more than 80 of these letters since December 2018 and another 50 letters to affiliates of the Untitled Letter recipients as another means of getting the word out.

Mendoza explained that when CBER issues an Untitled Letter to a cellular therapy company it is usually based on a website review. In most instances, a warning letter results from an inspection, which may result from whatever prompted the Untitled Letter.


“Firms are getting creative, and we are in hot pursuit of them.”

https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=1&SID=af243682e68fd8ac31223c06550c0c71&ty=HTML&h=L&mc=true&r=PART&n=pt21.8.1271

https://govzilla.com/wp-content/uploads/2020/04/Regulatory-Considerations-for-Human-Cells-Tissues-and-Cellular-and-Tissue-Based-Products-2017.pdf



A Two-Month Microcosm

The CBER deputy office director explained that a review of the final two months of calendar year 2019 would provide “a good glimpse” into CBER’s work for all that year. Actions during that time included the issuance of Untitled Letters, Warning Letters, and an administrative action to cease manufacturing.

On December 5, 2019 CBER issued a warning letter to Liveyon Labs and Liveyon LLC. The firm was marketing a cellular product derived from umbilical cord blood intended to treat orthopedic conditions. The labeling indicated that it should be administered intraarticularly. It is not approved by FDA for any use. CBER believes the product should be regulated as a drug and biologic product.

The Office of Biological Products Operations conducted an inspection of Liveyon in May 2019 and documented Current Good Manufacturing Practices (CGMP) violations as well as Current Good Tissue Practice (CGTP) violations, which were conveyed to Liveyon in the warning letter. Liveyon also had a first generation product that was the subject of a warning letter in 2018 that was being processed by Genentech.

Liveyon’s first generation product was the subject of a CDC Morbidity and Mortality Weekly Report, on December 21, 2018. It documented the bloodstream infections that Liveyon’s first generation product was linked to in over 12 patients across multiple states.

Liveyon is currently being featured in a popular podcast called Bad Batch. The company also has a video podcast through which it markets its products as being not drugs and biological products, but the lesser-regulated human cellular and tissue-based section 361 products. “We, of course, disagree as evidenced by our letter,” Mendoza said. CBER also issued a safety notification to Liveyon on December 6.

On November 27, 2019 CBER issued an administrative order against Gynecology, Reproductive Endocrinology and Fertility Institute (GREFI) of San Juan, Puerto Rico and its Medical Director and

https://govzilla.com/wp-content/uploads/2020/04/Liveyon-Labs-Inc-WL-12_05_2019-_-FDA.pdf

https://govzilla.com/wp-content/uploads/2020/04/Genetech-Inc.-WL-11_29_2018-_-FDA.pdf

https://govzilla.com/wp-content/uploads/2020/04/CDC_Morbidity_and_Mortality_Weekly_Report_December_21_2018.pdf

https://govzilla.com/wp-content/uploads/2020/04/December_6_2019_Safety_Notification_to_Liveyon.pdf

https://govzilla.com/wp-content/uploads/2020/04/GREFI_Order_to_Cease_Manufacturing.pdf


Owner, Dr. Rosa I. Cruz, to immediately cease manufacturing due to significant violations of FDA regulations.

An FDA inspection and subsequent record review revealed that GREFI was not testing for relevant communicable diseases for its reproductive tissues, including for HIV, hepatitis, syphilis, chlamydia, and gonorrhea. They were also not properly screening donors.

“We took swift action involving a firm for which we had reasonable grounds to believe their products posed a danger to health,” Mendoza emphasized. The clinic’s actions put patients at risk for exposure to the communicable diseases it was not testing for.

CBER issued an untitled letter to Chara Biologics in California on November 25, 2019, based on a review of its website. “The best I can tell, the product is umbilical cord tissue and amniotic membrane,” Mendoza explained. “Sadly, they are offering it to parents of children with autism, claiming that these children will speak more as a result of having the product, especially in higher doses. They are also offering it to autistic children in hopes that they will do things such as use the bathroom or no longer need diapers. They are also marketing the product to adults suffering from traumatic brain injury.”

Chara states that its products are “suitable for all forms of injection, to assist the body’s ability to repair and regenerate.” CBER notified Chara that these products are regulated as drugs and biological products and they are not approved for any use.

It issued a similar letter a week earlier to RichSource Stem Cells, another combination product described as a combination of amniotic fluid and membrane, Wharton’s jelly, and placental tissue. The product is called RichGen, and it is claimed to treat cancer, tumors, diabetes, Lyme’s disease, asthma, COPD, various orthopedic conditions, and topical wound healing. It is not approved by FDA for any use.

In High Profile Cases, Courts Agree with CBER

Mendoza reviewed some high profile cases CBER has been involved in that ended up in federal court, and the outcomes.

In June 2019, in United States District Court for the Southern District of Florida, the government prevailed in a landmark case against US Stem Cell Clinic and another corporate entity and the Chief Scientific Officer for both of those entities.

“The court in this case agreed with the government and what we have been saying for years—that the defendant’s establishment is subject to FDA’s jurisdiction, that the products are regulated as drugs and

“The court in this case agreed with the government and what we have been saying for years—that the defendant’s establishment is

subject to FDA’s jurisdiction, that the products are regulated as drugs and biological products, and must adhere to all the requirements that

come with that, from pre-market review and approval to CGMP requirements and others.”


biological products, and must adhere to all the requirements that come with that, from pre-market review and approval to CGMP requirements and others.”

The case involved the defendants’ adulteration and misbranding of a cellular product that is derived from adipose tissue (body fat). The product was referred to as a stromal vascular fraction (SVF) product. These were cells taken from human fat tissue and extensively processed.

The clinic was administering the product both intravenously or directly into the spinal cord of patients to treat a variety of serious diseases or conditions, including Parkinson’s disease, ALS, COPD, heart disease and pulmonary fibrosis. FDA has not reviewed or approved any biological products manufactured by US Stem Cell Clinic for any use.

“The court in this case agreed with the government and what we have been saying for years,” Mendoza explained, “that the defendant’s establishment is subject to FDA’s jurisdiction, that the products are regulated as drugs and biological products, and must adhere to all the requirements that come with that, from pre-market review and approval to CGMP requirements and others.”

The court enjoined the companies and their Chief Scientific Officer. The case is currently on appeal before the 11th Circuit Court.

Mendoza also described a similar case that she referred to as a “sister action” in the Central District of California against the California Stem Cell Treatment Center, the Cell Surgical Network, and the responsible individuals involved. The defendants are also offering multiple SVF products for treatment of a variety of diseases. Like the product in the US Stem Cell Clinic, these SVF products are not approved for any use. CBER is seeking a permanent injunction against the entities.

Those two cases continue the trend of active litigation involving HCT/Ps and articles related to HCT/Ps. “There is still a lot of active litigation. Last year, we took aggressive enforcement action against Five Articles of Drug—specifically, ACAM 2000, which is a licensed biological product that is intended to immunize those at high risk of smallpox infection. This would include certain members of the military.”

However, it was not intended to be used for that purpose. Rather, it was intended to be mixed with an SVP product to be administered, for example, to advanced stage cancer patients.

Exosomes Remain Undefined but Used in Unapproved Marketed Products

Mendoza explained CBER is “attempting to keep up with the new unapproved products that are regulated as drugs, devices and/or biological products. One of those are products marketed as exosome products.” She pointed out that exosomes have not been defined by the agency.

“It is unclear exactly what is being marketed as exosomes. Some market their product as an ‘exo shot’ that is administered in combination with other HCT/P products or for additional therapeutic benefit. Again, all outside of FDA’s review and oversight.”

“They deceive patients with unsubstantiated claims about the potential for these products to prevent, treat or cure various diseases and conditions.”


According to a Q&A in BCM Biology, “Since the original description of exosomes over 30 years ago, the term has been loosely used for various forms of extracellular vesicle, muddying the field and contributing to the skepticism with which the research has sometimes been met. Exosomes are best defined as extracellular vesicles that are released from cells upon fusion of an intermediate endocytic compartment, the multivesicular body (MVB), with the plasma membrane. This liberates intraluminal vesicles (ILVs) into the extracellular milieu and the vesicles thereby released are what we know as exosomes.”

The agency used a public safety notification on December 6, 2019 to warn the public about exosome products.

The Safety Notification said in part, “Certain clinics across the country, including some that manufacture or market violative ‘stem cell’ products, are now also offering exosome products to patients. They deceive patients with unsubstantiated claims about the potential for these products to prevent, treat or cure various diseases or conditions. They may claim that these products do not fall under the regulatory provisions for drugs and biological products—that is simply untrue.”

It includes questions for patients to ask clinics, manufacturers, or health care professionals about the products. It also sheds light on some serious recent adverse events that have been brought to the agency’s attention—patients who have been seriously adversely affected by exosome products in Nebraska. The intention of the notice is “to bring some public attention to the issue so people will recognize that the risks related to all these unapproved products that should be under FDA’s oversight are real and patients are being harmed.”

Cell and Gene Therapies are the Future of Medicine

Mendoza commented that her office is seeing new trends and products they have never seen before. “As a lawyer at CBER I can tell you that I repeatedly ask my product office colleagues and agency experts whether what I am seeing is actually the case and for an explanation of some products and technologies that are fairly remarkable.”

In addition to releasing guidance and performing enforcement activities, CBER is also working to promote innovation. “We are poised and ready to do whatever we can within the bounds of the law to do that. Cell and gene therapies are the future of medicine, in some respects, and that is beyond dispute. We are seeing more approvals all the time. We hope to see many more. It is exciting for us in the Office of Compliance to see all this innovation.”

Links

Liveyon Labs 2019 Warning Letter Genentech 2018 Warning Letter Mentioning Liveyon CDC Morbidity and Mortality Weekly Report December 21, 2018 December 6, 2019 Safety Notification to Liveyon GREFI Order to Cease Manufacturing Regulatory Considerations for Human Cells, Tissues, and Cellular and Tissue-Based Products: Minimal Manipulation and Homologous Use Q&A on Exosomes in BCM Biology 21 CFR Part 1271

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4906597/

https://govzilla.com/wp-content/uploads/2020/04/Liveyon-Labs-Inc-WL-12_05_2019-_-FDA.pdf

https://govzilla.com/wp-content/uploads/2020/04/Genetech-Inc.-WL-11_29_2018-_-FDA.pdf

https://govzilla.com/wp-content/uploads/2020/04/CDC_Morbidity_and_Mortality_Weekly_Report_December_21_2018.pdf

https://govzilla.com/wp-content/uploads/2020/04/December_6_2019_Safety_Notification_to_Liveyon.pdf

https://govzilla.com/wp-content/uploads/2020/04/GREFI_Order_to_Cease_Manufacturing.pdf



https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4906597/

https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=1&SID=af243682e68fd8ac31223c06550c0c71&ty=HTML&h=L&mc=true&r=PART&n=pt21.8.1271


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Avoiding and Reacting to Human Tissue, Cell and Gene Therapy Enforcement Actions: Communication is Key

In the final two months of the calendar year 2019, FDA’s Center for Biologics Evaluation and Research (CBER) took compliance actions against human tissue, cell, and gene therapy manufacturers that included the issuance of Untitled Letters, Warning Letters, and an administrative action to cease manufacturing. These took place when the agency was in a period of enforcement discretion, which will come to an end in November (see previous story in this Special Report for more on that topic).

At the Food and Drug Law Institute (FDLI) Enforcement, Litigation, and Compliance Conference held in Washington, DC in December 2019, Validant Principal Consultant Katie Laney explained ways in which manufacturers of human tissue, cell, and gene therapy products might avoid FDA enforcement actions, and how to address those actions if they take place.

Avoiding Enforcement: Understand Product Classification

FDA defines human cell, tissue, and cellular and tissue-based products (HCT/Ps) in 21 CFR Part 1271 as “articles containing or consisting of human cells or tissue that are intended for implantation, transplantation, infusion, or transfer into a human recipient.” There are two broad categories of HCT/Ps with vastly different regulatory requirements, defined under sections 351 and 361 of the Public Health Services Act (PHSA).

Which section a product falls under can be a source of confusion, specifically regarding the interpretation of the terms “minimal manipulation” and “homologous use.” An HCT/P regulated solely under Sec. 361 has extremely specific properties and does not require an IND or pre-market approval―the company or individual simply needs to declare that they meet the description of a 361 product. However, agency or expert involvement in making that declaration is highly recommended.

TRIP & Pre-RFD

Laney explained that one of the avenues that the agency has opened for consultation on this topic is the TRIP program―the Tissue Reference Group (TRG) Rapid Inquiry Program (TRIP).

TRIP was announced in June 2019 specifically to help manufacturers of HCT/Ps including stem cell treatments understand the appropriate regulatory pathways for their products. It allows sponsors who believe their product falls under 361 requirements to get advice and consultation from the agency on proper minimal manipulation and homologous use of their products.

“The beauty of the TRIP program,” Laney said, “is that it is informal and non-binding. It is an open forum for tissue manufacturers and processors to talk to the agency and get advice in a way that fuels open communication on a rapid-response timeline. This can be unbelievably valuable for section 361 products.”

In addition, she pointed to the FDA’s pre-RFD (Request for Designation) program, which is also informal and non-binding, and provides guidance from the agency on proper classification and branch assignment

https://govzilla.com/blog/2020/04/pharma-human-cell-and-tissue-therapy-enforcement-actions-target-unapproved-new-products-making-unsubstantiated-claims/


of a product. This can help product sponsors who, for example, are using a delivery mechanism for their product or might be combining their product with another agent.

The TRIP and pre-RFD consultation processes allow sponsors of cell, tissue, and gene therapies the opportunity to talk with the agency and get their advice before going through the RFD process, which is a formal and binding determination from the agency. Engaging in these consultations can also help avoid enforcement actions.

GMP/GTP Gap Assessments

Laney noted that she often sees a lack of understanding by the cell tissue and genetic manufacturers of the regulatory space they are in and a lack of qualified internal resources to make regulatory determinations. She encourages labs with products in development “to reach out and have third party assistance come in and do various assessments to avoid any enforcement action downstream.”

An assessment the firms find “most beneficial,” she said, is a Good Manufacturing Practices (GMP) or Good Tissue Practices (GTP) gap assessment, independent of whether it is a “tissue bank with legacy tissue products that are looking to expand into the cellular and gene therapy space or it is a research-based facility that is looking to develop a cell or a gene-based therapy. They need to understand how the GMPs apply to their organization and build out accordingly. That is an excellent way to avoid downstream enforcement actions.”

A gap assessment in this area, Laney said, should contain the following elements:

● Identification of noncompliance to FDA regulations

● Recommendations for corrective actions to ensure compliance

● A nonbiased, thorough review of the Quality Management System

● Professional and/or legal interpretation of FDA regulation(s) and Guidance for Industry documents

● Enforcement actions in the area

● Advice regarding product development and design changes

● Advice on regulatory pathway determination and strategy for section 361 vs. 351 products

● Explanation of Part 351 Investigational New Drug (IND) and Biologic License Application (BLA) processes, regulatory requirements, and timelines

Addressing Enforcement Actions

When a company is faced with addressing an enforcement action―for example, if it was marketing a product without FDA approval it thought was a part 361 product but an agency investigator inspected and said the product is a part 351 product―communication with the agency is, again, key.

One of the “best ways” for companies to open communication channels with FDA is through the pre-IND process, Laney said. “This is another example of a consultation program offered by the agency where clients can begin communication, including tele-meetings and in-person meetings with the agency, to


get guidance on the IND [Investigational New Drug] process and understand what data it will be required to submit.”

She explained that the process “gets you in front of the agency in an informal way that shows you are committed to addressing enforcement actions and that you are committed to the pre-market process that the agency has suggested to you.”

Laney provided an overview of the IND and Biological License Application (BLA) process, including what the timeline looks like and what the compliance requirements are across the IND and BLA process, and discussed the importance of understanding the process (see Figure 1).

“I think what is most important to see here is not only the amount of time that this process takes―which I think is something that is misunderstood by some manufacturers―but that the pilot studies, pivotal studies, and the BLA application are very important to understand, as well as the compliance requirements across the IND and BLA process,” Laney advised.

For those technologies that may have begun in the 361 space―self-designating in that way and then needing to upgrade to GMP―it is important to understand that the GTP requirements are in place from the beginning.

Laney also recommended that in addition to communicating with CBER, “engagement with local district offices in the event of a 483 report or something similar” is recommended “to ensure that appropriate containment and corrective action is taken for products that might be distributed in that area.”

The Validant Principal Consultant stressed the importance of HCT/P companies addressing enforcement issues to ensure that investigations into allegations or 483 reports of non-conformance are thorough, that adequate containment takes place, root cause analysis is performed, and appropriate corrective action and preventive action (CAPA) tasks are assigned and completed in a timely manner. The CAPA actions, she said, should “take a larger systemic look at the entire quality management system and address issues from a systemic standpoint.”


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Department of Justice Consumer Protection Branch Doubles in Size to Battle Fraud and Deception in the Drug and Dietary Supplement Industries (Part 1)

In the last two years, the Department of Justice (DOJ) Consumer Protection Branch (CPB)—responsible for investigating and litigating civil and criminal violations of the Food, Drug, and Cosmetic Act (FDCA) and the Controlled Substances Act (CSA)—has nearly doubled its number of attorneys and more than tripled its support staff of law clerks, paralegals, and investigators to battle fraud and deception in the drug and dietary supplement industries.

While FDA that administers FDCA and the U.S. Drug Enforcement Administration (DEA) that oversees the CSA have their own enforcement tools, CPB gets involved if those tools fail to bring a bad actor into compliance.

At the Food and Drug Law Institute (FDLI) Enforcement, Litigation, and Compliance Conference held in Washington, DC in December 2019, Deputy Assistant Attorney General for the DOJ’s CPB David Morrell reviewed highlights of the CPB’s enforcement work from 2019 and discussed how that work portends future action.

He commented that the FDCA and CSA “are, at heart, public health statutes and not just laws to punish wrongdoing. The public’s safety depends on voluntary compliance up and down the product supply chain. And we know that the vast majority of individuals and entities operating in the food and medical-product sectors share a commitment to voluntary compliance in developing and marketing life-saving and life-improving products,” but there are also those “who cut corners and at times engage in outright fraud.”

Morrell explained that the CPB advances its work using both criminal and civil tools, including criminal enforcement actions. It also defends consumer protection agencies—including the FDA—in federal litigation. “In all of our work, we collaborate closely with our agency partners, law-enforcement investigators, and colleagues in the U.S. Attorneys’ Offices.”

In his presentation, Morrell reviewed the five main areas CPB focused its efforts on in 2019:

● dietary supplement fraud;

● the prescription opioid crisis;

● regulatory deception;

● sterile compounding violations; and

● vaping.

“The public’s safety depends on voluntary compliance up and down the product supply chain.”


At the conclusion of his talk he discussed new tools and collaboration efforts the branch has been engaging in and plans for 2020.

“Our work in each area is directed at addressing and preventing consumer harm,” Morrell emphasized. “Sometimes this follows from an incident of consumer harm. Other times, our work flows from repeated regulatory violations that are likely to cause harm.”

Dietary Supplement Market Growing Rapidly

High-profile cases in 2019 in the dietary supplement area included successful prosecution of individuals in a fraud and smuggling scheme to sell mislabeled dietary supplements containing hidden synthetic stimulants, and another case where company personnel admitted to misleading customers about the source and nature of their ingredients—claiming they derived from natural plant extracts when they actually contained a synthetic stimulant manufactured in a Chinese chemical factory. Some of these materials were imported into the U.S. using false certificates of analysis and labeling.

Morrell pointed out that three out of every four American consumers take a dietary supplement on a regular basis. In older Americans, the rate rises to four out of five. What was once a $4 billion industry comprising about 4,000 unique products, is now an industry worth more than $130 billion, with more than 50,000 different products available to consumers. “In just a few years, the supplement industry will be worth hundreds of billions of dollars,” he predicted.

Former FDA Commissioner Scott Gottlieb announced earlier last year a new plan for modernizing FDA’s dietary supplement regulation and oversight. This followed the creation just three years ago of FDA’s Office of Dietary Supplement Programs. The DOJ also has recognized the need for greater action against abuses in the dietary supplement space. “It is just common sense that there will be fraud where you have a combination of high profits, developing science, imported ingredients, and limited oversight,” Morrell said.

In 2019, he noted, the Consumer Protection Branch secured criminal convictions against 15 individuals and corporations for defrauding consumers about the ingredients in and uses of their dietary supplements. Concluding a prosecution that “drew much attention when initiated,” the CPB secured felony guilty pleas from the five leading defendants and two corporate defendants in the USPlabs case. [Editor’s Note: USPlabs is in no way affiliated with USP, the United States Pharmacopeia.]

Dallas-based dietary supplement company USPlabs management pleaded guilty in March 2019 to conspiracy to introduce misbranded food into interstate commerce and introducing misbranded food into interstate commerce with the intent to defraud or mislead.

The misbranding charges relate in part to a product called OxyElite Pro, which was recalled in 2013 in the wake of an investigation by the FDA into whether the supplement caused liver injuries in consumers. All the defendants were charged in a 2015 indictment returned by a Dallas federal grand jury in the Northern District of Texas.


The defendants, who collectively agreed to pay $60 million in forfeiture and face years of imprisonment, each admitted to participating in a conspiracy to import dietary supplement ingredients using false certificates of analysis and labeling. They also admitted to misleading customers about the source and nature of their ingredients—claiming they derived from natural plant extracts when they actually contained a synthetic stimulant manufactured in a Chinese chemical factory.

“By rooting out baseless efficacy claims and undeclared ingredients, we hope that our work will benefit the many legitimate supplement manufacturers who are complying with the law and, most importantly, will keep consumers safe.”

Similarly, CPB successfully prosecuted three Chinese nationals and two companies in connection with another fraud and smuggling scheme to sell mislabeled dietary supplements containing hidden synthetic stimulants. And it recently indicted six individuals and two companies for allegedly selling dietary supplements that contained ingredients—including anabolic steroids—they knew were dangerous or illegal. “That indictment is notable,” Morrell said, “because it contains the first-ever charges under the Designer Anabolic Steroid Control Act of 2014.”

On top of these criminal actions, CPB also used its civil tools to enjoin various supplement manufacturers and distributors who were making unapproved new drug claims about their products and failing to adhere to current good manufacturing practices (CGMPs), which are essential to ensuring that supplements contain what is promised and are not adulterated. “CPB shares FDA’s concern that the making of unapproved new drug claims risks causing consumers to forego approved and more appropriate medical treatments, leading to predictable patient harm,” Morrell emphasized.

He predicted that DoJ will increase its resources devoted to investigating and litigating in this area. CPB will add six new attorneys to focus on such efforts and will coordinate its work with FDA and other partners—including, notably, the Department of Defense (DoD), which is concerned about servicemembers’ use of adulterated supplements.

“By rooting out baseless efficacy claims and undeclared ingredients, we hope that our work will benefit the many legitimate supplement manufacturers who are complying with the law and, most importantly, will keep consumers safe,” he concluded.

The Prescription Opioid Crisis Continues

“No review of enforcement in the food and drug world would be complete without a discussion of the department’s broad efforts to stem the prescription opioid crisis, which unfortunately still has a stranglehold on this country,” Morrell stressed. “As a leading component of the department’s

“By rooting out baseless efficacy claims and undeclared ingredients, we hope that our work will benefit the many legitimate supplement manufacturers who are complying with the law and, most importantly, will keep consumers safe.”


Prescription Interdiction and Litigation—or PIL—Task Force, the Consumer Protection Branch is at the center of those efforts, advancing cases against opioid manufacturers, distributors, and chain pharmacies.”

Over the summer, global consumer goods conglomerate Reckitt Benckiser Group agreed to pay $1.4 billion to resolve its criminal and civil liability related to a federal investigation into the marketing of the opioid addiction treatment drug, Suboxone. The resolution was the largest recovery by the United States in a case concerning an opioid drug.

CPB also indicted Reckitt Benckiser Group’s former subsidiary, Indivior Inc., for allegedly engaging in an illicit nationwide scheme to increase prescriptions of Suboxone. Trial for that case is set for May 2020.

In addition to criminal actions, CPB also routinely deployed a new tool in 2019—CSA civil injunctions—to take quick action to stop the illegal flow of prescription opioids. Dusting off a statutory provision that went virtually unused for 40 years, CPB sought and obtained injunctions to stop the unlawful prescribing and dispensing of controlled substances. Consistent with department policy it did much of this work in parallel with active criminal investigations and prosecutions.

When DEA data showed that two pharmacies in a small Tennessee town were dispensing enough opioids to supply a city, CPB successfully enjoined the two pharmacies, their majority owner, and three pharmacists from continuing to dispense controlled substances.

The complaint also sought monetary penalties under the CSA and damages under the False Claims Act, and it was followed by criminal action against one of the pharmacists. Morrell said that CPB and its partners plan to bring “many similar actions against a range of individuals and entities” in 2020.

Department of Justice Consumer Protection Branch Doubles in Size to Battle Fraud and Deception in the Drug and Dietary Supplement Industries (Part 2)

At the Food and Drug Law Institute (FDLI) Enforcement, Litigation, and Compliance Conference held in Washington, DC in December 2019, Deputy Assistant Attorney General for the Department of Justice (DOJ)’s Consumer Protection Branch (CPB) David Morrell reviewed highlights of the CPB’s enforcement work from 2019 and discussed how that work portends future action.

In Part 1, we covered David Morrell’s comments on dietary supplements and the prescription opioid crisis.

We continue here with his comments on:

● Attempts to deceive FDA: prosecuted

● Compounding pharmacies

● Investigations into injuries and deaths from vaping

● New tools for law enforcement

● The importance of company compliance programs


Attempts to Deceive FDA: Prosecuted

“One of the most important cornerstones of our regulatory relationship with FDA is the guarantee that we will vigorously pursue those who interfere with FDA’s mission of evaluating, approving, and regulating drugs and medical devices,” the Deputy Assistant Attorney General maintained. “These kinds of actions traditionally have included failure-to-report violations, interference with FDA, any number of misbranding offenses, false and misleading claims, and the misuse of manipulated or selectively chosen data. These actions all create a substantial risk of consumer harm.”

In May 2019, an individual named Hisao Yabe was sentenced for his failure to report information to FDA that called into question the safety of a medical scope manufactured by his employer, Olympus Medical Systems Corporation. Yabe was formerly the top regulatory official at the Japanese company, which also was convicted and ordered to pay $85 million in criminal fines and forfeiture.

Yabe’s and Olympus’s convictions specifically concerned their failure to file required adverse event reports involving patient infections in the U.S. and Europe connected to duodenoscopes the company manufactured, and to continue to sell the devices in the United States despite those failures.

In June 2019, ACell Inc., a Maryland-based medical device manufacturer, similarly pleaded guilty to one misdemeanor count of failure and refusal to report a medical device removal to the FDA. In pleading guilty, ACell admitted that it failed to report that more than 30,000 of its MicroMatrix devices were contaminated with high levels of endotoxin, which posed a risk to patient health.

ACell also admitted that it initiated a removal of those devices from sales representative inventories, hospitals, and other healthcare centers, but did not notify FDA of the removal or of the endotoxin contamination. ACell further admitted that it did not notify doctors who already had purchased or used contaminated MicroMatrix devices about the removal.

“Such actions interfere with FDA’s essential functions,” Morrell said, “and put patients at risk and end up costing the responsible executives and companies far more in the long run than they save in the short term. The actions also were all caused by failures of corporate compliance programs.”

Compounding Pharmacies Continue to Have Issues

Compounding pharmacies are a sector of the drug industry that has long been an area of concern for both FDA and CPB. The CPB and its partners have a long history of successful enforcement against problematic compounding pharmacies—and 2019 was no different.

CPB primarily looks at facilities that put patients at risk through repeated violations of the “insanitary conditions” provisions under section 351 of the FDCA. Such conditions may include circumstances under which contamination or injury may occur, “but neither we nor FDA will wait until harm does occur to act. Compounders who don’t take their mission seriously, especially those making sterile injectable products, should thus not be surprised when FDA and CPB visit them with an inspection, an injunction, or a grand-jury subpoena,” Morrell said.


Two actions in 2019 show the breadth and depth of CPB’s commitment in this area. In the first, CPB obtained a consent decree of permanent injunction against the massive outsourcing compounding pharmacy PharMedium, along with two of its executives, to stop its manufacturing, holding, and distribution of drugs from its Tennessee facility until remedial measures are taken.

The complaint alleged that PharMedium’s drugs were adulterated because of insanitary conditions and because PharMedium failed to comply with CGMPs. The FDA conducted multiple inspections at PharMedium’s corporate headquarters and outsourcing facilities between 2013 and 2018 that resulted in a 2018 warning letter for insanitary conditions and other violations of the FD&C Act.

In the second action, CPB secured the conviction of Paul Elmer, who operated a drug compounding pharmacy called Pharmakon in Noblesville, Indiana. Trial evidence showed that Pharmakon routinely shipped sterile, intravenous drugs to hospitals without having received laboratory test results to verify that the drugs matched their stated strengths.

Evidence also showed that, despite later receiving laboratory test results showing potency failures, Elmer did not recall over- or under-potent drugs; notify the FDA of the potency failures; or conduct any investigation to determine the cause of the potency failures. “His actions led to several infants nearly dying after being injected with 2000x super-potent morphine—and he is now in jail,” Morrell said.

Injuries and Deaths from Vaping Prompt Investigations

The outbreak of severe lung injuries related to vaping products has led to a national health crisis that threatens Americans, including many younger Americans. To date, the CDC has reported 2,051 injuries and 39 deaths related to vaping products.

“While the CDC and FDA continue to investigate the cause of the outbreak as a public health issue, they have raised a particular concern about vaping products containing THC,” Morrell pointed out. THC (tetrahydrocannabinol) is the principal psychoactive constituent of cannabis. “In line with that concern, CPB and a bevy of law enforcement partners are advancing actions across the country concerning the importation, distribution, and sale of counterfeit, misbranded, and adulterated THC vaping products and paraphernalia.”

Morrell explained that the actions that have been taken are already producing results, with an indictment secured in December 2019 in Dallas and numerous search warrants executed “that promise to help us stop individuals who are selling poison dressed up as a carefree product. More work here will continue.”

“His actions led to several infants nearly dying after being injected with 2000x super-potent morphine—and he is now in jail.”


In addition, CPB will be prepared to take appropriate action against adulterated and misbranded electronic nicotine delivery system products, and to defend the FDA’s efforts to halt the rise in harmful teen vaping, he said.

New Tools Enable Proactive Behaviors

“Law enforcement is undergoing a transformation,” Morrell maintained. “For the first time ever, we are consistently able to advance enforcement initiatives proactively, rather than just reacting to whatever leads may come our way.”

He explained that the ability to analyze large subsets of data and documents has made this possible. Instead of agents conducting investigations based on leads and then bringing whatever cases they may develop to a prosecutor, CPB is able to have agents and prosecutors work in tandem at the outset to spot outliers and significant subjects for investigation.

Combining data from Customs, FDA, DEA, Centers for Medicare and Medicaid Services, Social Security Administration, DoD, Federal Trade Commission, “and the rest of the alphabet agencies” makes this possible, Morrell explained, “in conjunction with sophisticated analytical tools. The Consumer Protection Branch is at the cutting edge of the effort to initiate and develop investigations intelligently through data analytics.”

He emphasized that as new tools improve the Branch’s ability to select and advance investigations that involve the greatest elements of consumer harm and deception, it is also seeking to exercise enforcement discretion more robustly to avoid matters that lack those elements.

In addition, it is now utilizing a greater range of options in seeking appropriate resolutions. “In some instances—like the non-prosecution agreement reached with Reckitt Benckiser Group—this means accepting unique resolution terms; in others, it can mean using a civil remedy over a criminal remedy or talking first and threatening suit second.”

Morrell explained that CPB’s pioneering use of civil injunctions in the CSA space is an example of this in action. “We are able with those injunctions to take quick action to achieve the primary goal of stopping overdose deaths without prejudicing our ability to later use a criminal tool for other ends. Our belief is that reasonable employment of such enforcement approaches makes us more credible, efficient, and effective.”

He continued, “In addition to being smarter in our enforcement of priority initiatives, we also are aiming to be consistent and adherent to basic rule-of-law principles. The October 2019 Executive Orders on agency guidance and enforcement are helpful to that effort. The Executive Orders are designed to prevent unfair surprise and to ensure that agency guidance does not become a back-door means of regulation.”

“Violations of law should be based on statutes and regulations enacted with proper notice and comment. As President Trump noted when issuing the Executive Orders, however, many federal agencies have issued thousands of guidance documents. And instead of serving their intended purpose—guidance—the documents often morph into requirements used to assign liability.”

The DOJ’s long-standing policy has been to bring enforcement litigation only for violations of federal statutes and their attending regulations. Nothing there has changed, and the department may still take


enforcement action consistent with agency policy statements—including FDA’s Compliance Policy Guidelines—so long as those statements are not the sole basis for enforcement and are firmly based in a statute or regulation.

The Importance of Company Compliance Programs

Morrell emphasized the importance of companies that are regulated by FDA having programs that help ensure their compliance with regulations and agency expectations. “A good compliance program can keep a company out of trouble and help make a resolution possible if it nevertheless finds itself there,” he said.

He commented that the guiding principles in FDA-regulated industries “are founded on the notion that more than just profits are at stake. Our stock in trade is human health, safety, and welfare, and so the FDCA in many ways should make us more adept at crafting and adhering to compliance policies. At the same time, because of this background, the need and expectation for a compliance program is also greater in the FDCA context, where, as I mentioned, voluntary compliance with the law is essential.”

Morrell explained that for purposes of consistency within the department — “and because it makes good sense”—the CPB follows the same principles as the department’s Criminal Division in assessing compliance programs for charging and resolution purposes. Key to those principles is the idea that companies can expect the department to decline to prosecute if they report wrongdoing in a timely manner, cooperate fully, and remediate adequately.

He explained that “the idea requires a fact-specific analysis of each case, and it offers benefit only if a company has enough of a compliance system to identify and report a problem in the first place. But it should be a helpful motivator to take compliance seriously and realize that a call from you to us is better than a call from us to you.”

David Morrell is Deputy Assistant Attorney General for the Consumer Protection Branch at the United States Department of Justice. Before joining DOJ, he worked in the White House Counsel’s office where he served as Associate Counsel and Special Assistant to the President. There, Mr. Morrell advised senior White House officials on a range of topics, collaborated on legal issues with agencies throughout the Executive Branch, and worked extensively with the Department of Justice including on significant litigation matters. Prior to joining the White House, Mr. Morrell was in private practice at Jones Day and he clerked on the U.S. Court of Appeals for the 5th Circuit for then Chief Judge Edith Jones, and on the U.S. Supreme Court for Justice Clarence Thomas. He graduated from Yale Law School and from Hillsdale College.

“It should be a helpful motivator to take compliance seriously and realize that a call from you to us is better than a call from us to you.”

special report by fdli...a failure to conduct any release testing for the products that they were...

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