FR FDA 09/10/91 NOTICE 56 FR 46191 - FRAUD, UNTRUE STATEMENTS OF MATERIAL FACTS, BRIBERY, AND ILLEGAL GRATUITIES; FINAL POLICY
Vol. 56 No. 175 Tuesday, September 10, 1991 p 46191 (Notice) 1/1130 56 FR 46191
[Docket No. 90 N-0332]
FR FDA 09/10/91 NOTICE 56 FR 46191 - FRAUD, UNTRUE STATEMENTS OF MATERIAL FACTS, BRIBERY, AND ILLEGAL GRATUITIES; FINAL POLICY
AGENCY: Food and Drug Administration, HHS.
SUMMARY: The Food and Drug Administration (FDA) is announcing its final policy on "Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities" (fraud policy). The policy sets forth FDA's general approach regarding applicants that seek to subvert the agency's review and approval processes for premarket applications. The policy also outlines recommended corrective actions by which applicants may seek to restore FDA's confidence in their integrity and permit the agency to proceed with substantive scientific review of their premarket applications. The final policy is being issued as Compliance Policy Guide (CPG) 7150.09.
EFFECTIVE DATE: September 10, 1991.
ADDRESSES: CPG 7150.09 may be ordered from National Technical Information Service (NTIS), U.S. Department of Commerce, 5285 Port Royal Rd., Springfield, VA 22161. Orders must reference NTIS order number PB 91-228098 and include payment of $9 for each paper or microfiche copy. Payment may be made by check, money order, charge card (American Express, Visa, or Mastercard), or billing arrangements made with NTIS. Charge card orders must include the charge card account number and expiration date. For telephone orders or further information on placing an order, call NTIS at 703-487-4650. CPG 7150.09 is available for public examination in the Dockets Management Branch (HFA-305), Food and Drug Administration, rm. 1-23, 12420 Parklawn Dr., Rockville, MD 20857, between 9 a.m. and 4 p.m., Monday through Friday.
FOR FURTHER INFORMATION CONTACT: Mischelle B. Ledet, Division of Compliance Policy (HFC-230), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-443-1500.
SUPPLEMENTARY INFORMATION: As a result of activities involving fraud, untrue statements of material facts, bribery, and illegal gratuities (wrongful acts) by some manufacturers of generic human drugs, FDA has investigated and assessed various efforts to subvert the integrity of the agency's review processes. In its investigations resulting from illegal gratuities provided to FDA employees and fraud and discrepancies in data submissions, FDA uncovered broader patterns of fraud and discrepancies in applications to the agency that raise serious questions as to the reliability of all data submissions by those applicants offered to demonstrate product safety and efficacy. FDA, therefore, developed an approach to ensure validity of data called into question by such wrongful acts and to remove from the market products for which application approval was based on fraudulent data..
In the Federal Register of December 21, 1990 (55 FR 52323), FDA published its proposed policy on "Fraud, Material False Statements, Bribery, and Illegal Gratuities." The proposed policy described the agency's approach regarding data submissions from applicants who have sought to subvert the agency's review and approval of premarket applications. The proposed policy also outlined corrective actions by which applicants that have engaged in such subversion may seek to restore FDA's confidence in the integrity of data in their applications and permit the agency to proceed with substantive scientific review of that data.
FDA requested comments on the proposed policy by January 22, 1991. FDA subsequently extended the comment period to February 21, 1991. Notice of this extension was published in the Federal Register of January 25, 1991 (56 FR 2929).
FDA received 16 letters of comment on the proposed policy. Eight of the letters were from trade associations, five from drug manufacturers, one from a consumer group, one from a member of Congress, and one unsigned. A summary of the issues raised by the comments and the agency's responses to those issues are as follows:
- One comment expressed concern that FDA did not define the terms "fraud, material false statements, bribery, or illegal gratuities." The comment indicated there can be a substantial difference between fraud, bribery, and illegal gratuities, on one hand, and material false statements, on the other.
FDA is using the phrase "untrue statements of material facts," in the final policy rather than "material false statements." The phrase "untrue statements of material facts" is consistent with the language in the Federal Food, Drug, and Cosmetic Act (the act) (see, e.g., sections 505(e)(5) and 512(e)(1)(D)) (21
U.S.C. 355(e)(5) and 360b(e)(1)(D)). The terms "fraud, untrue statements of material facts, bribery, and illegal gratuities" are used consistent with their common meanings.
A few comments argued that the fraud policy should be promulgated under section 701 of the act (21 U.S.C. 371) as a binding, enforceable rule. One comment cited several court cases to support this position. The comments argued that denial of an application to market a drug or other product constitutes substantive agency action materially affecting the economic and proprietary rights of applicants and binds the applicants involved. One comment argued that the fraud policy defines "principles" for denial or withdrawal of approval that are substantive, not interpretative in nature, and warrant the adoption of regulations.
FDA does not agree that the fraud policy is a substantive rule or that the cited cases require that the rule be issued under section 701 of the act. (See Vietnam Veterans of America v. Secretary of the Navy, 843 F.2d 528, 530 (D.C. Cir. 1988); American Hospital Ass'n v. Bowen, 834 F.2d 1037, 1046 (D.C. Cir. 1987); Mada-Luna v. Fitzpatrick, 813 F.2d 1006, 1015-1016 (9th Cir. 1987); Information Systems & Networks Corp. v. Adbnor, 687 F. Supp. 674, 679 (D.D.C. 1988); see also Foundation on Economic Trends v. Johnson, 661 F. Supp. 107 (D.D.C. 1986).) The fraud policy does not establish any requirement that is binding upon any applicant or upon the agency. The fraud policy does not require any act on the part of any applicant, nor does it provide any interpretation or establish any standard by which FDA will determine whether an applicant's behavior is illegal or whether an application contains invalid data or is otherwise legally deficient. The policy is a directive to FDA managers to ensure, to the extent allowed by law and reasonably possible, that:
- Agency decisions on pending applications are made based upon reliable data;
- Agency resources are not wasted on reviews of data that are invalid;
- Pending applications containing fraudulent data are removed from the review process;
- Approval of applications containing fraudulent data is withdrawn; and
- Marketed products that may be affected by wrongful acts do not pose a threat to public health.
- One comment urged FDA to insist on full cooperation of suspect applicants to ensure that FDA investigative activities have not been impeded or obstructed. One comment noted that because a policy statement lacks the force and effect of law, FDA must be prepared to support and defend its actions pursuant to the policy statement in each case to which the policy is applied. The comment indicated agreement with the need to require corrective actions when an applicant has engaged in wrongful acts, but questioned how FDA will enforce its policy of corrective actions if an applicant declines to undertake those corrective actions voluntarily.
The first corrective action identified in the fraud policy is full cooperation by the applicant. FDA expects applicants, including all levels of the applicant's management and staff, to demonstrate active and effective efforts to identify the full scope of the wrongful acts and to implement corrective actions. FDA recognizes, however, that the fraud policy does not impose a legal requirement that applicants implement the corrective actions recommended in the policy. FDA will rely on traditional regulatory and administrative remedies when applicants do not voluntarily undertake necessary corrective actions.
- One comment contended that sanctions against an applicant that has deliberately submitted false or fraudulent data should be increased. The comment noted that the requirement to submit a newly certified application is not sufficient to guarantee rehabilitation of the applicant's character and does not provide a guarantee that a renewed application provides accurate and reliable information. The comment suggested that any applicant who has submitted fraudulent data or information has demonstrated such a fundamental lack of character and integrity that its applications are unqualified for agency approval, at least on the specific subject of the fraudulent application. The comment stated that FDA's policy should be amended to provide that when FDA finds that an applicant has engaged in deliberate, wrongful misconduct associated with a marketing application, the applicant is barred from receiving approved for that application and, in instances of repeated wrongdoing, is barred from approval of any application.
The fraud policy does not establish or impose any new sanctions for wrongful acts. The stated, general objective of the fraud policy, to refuse to approve, or to proceed to withdraw approval of, application containing fraudulent data, is an exercise of agency discretion under the existing statutes and regulations. The agency does not have express statutory authority to impose the suggested penalty of debarment. Although the Department of Health and Human Services (HHS) advanced legislation introduced last year during the 101st session of Congress to provide such authority to FDA, the legislation was not enacted.
- Several comments requested that applicants be notified of any allegations of wrongdoing and that they be permitted to respond to those allegations prior to any agency action. Several comments suggested that those accused of wrongdoing should be afforded an opportunity for a hearing prior to conducting a validity assessment of deferring substantive scientific review of their applications.
FDA intends ordinarily to notify applicants of wrongdoing and, in some instances, even of suspected wrongdoing associated with their applications. The agency will attempt to provide notification, to the extent reasonably possible, when a significant question has been raised regarding a pending application that requires a validity assessment. Each FDA center will develop procedures to provide such notice, consistent with the priorities, statutory provisions, and regulations applicable to that center's review process. Under this policy, conducting a validity assessment ordinarily will require further information from the applicant, and the applicant's ability to respond promptly may affect the time required for completion of review for final action on the application.
FDA does not agree that a hearing must be held prior to conducting a validity assessment. The fraud policy neither requires nor precludes any FDA center from providing an opportunity for an applicant to present its views prior to the agency's conducting a validity assessment or prior to deferring substantive scientific review pending the outcome of a validity assessment. An agency decision to assess data prior to the normal scientific review of an application does not constitute a sanction or final agency action on the application. Deferral of substantive data review under these circumstances will help ensure that FDA's limited resources are not wasted in reviewing invalid data, and that applications are approved based on valid data. As before the fraud policy was developed, final agency action to refuse to approve a pending application or to withdraw an approved application will be taken under the procedures set forth in the statutory provisions and regulations applicable to the particular review process.
- One comment expressed concern because the fraud policy provides that FDA may defer substantive review of all pending applications or may withdraw all applications submitted by an applicant suspected of misconduct. The comment disagreed with FDA's statement that deferral of substantive data review does not constitute a disqualification or debarment of the applicant. The comment argued that such deferral would constitute permissive debarment of a suspected applicant and that FDA currently lacks statutory authority for debarment. The comment further stated that the act does not authorize FDA to preclude an applicant from obtaining approval of submitted applications that are unrelated to the suspect drug application, which would be the practical effect of the policy of deferral of substantive review. Therefore, the comment opposed extending the fraud policy to applications submitted under section 505(b) of the act that are not directly or substantially affected by the wrongful acts. Another comment questioned the appropriateness of extending the fraud policy to applications other than abbreviated new drug applications for generic drugs.
FDA does not agree that the deferral of substantive data review under the fraud policy is equivalent to permissive debarment. The permissive debarment authority proposed in legislation during the 101st session of Congress would have precluded participation by an applicant in agency product approval processes for certain stated periods of time. The fraud policy does not authorize FDA to refuse to process or review a particular application. Although deferral of substantive data review under the fraud policy may affect the timing and nature of FDA's final action on the application, it does not preclude review and approval of the application.
The comment's reference to applications that are "directly and substantially" affected by wrongful conduct is not clear. It is clear, however, based on FDA's experience with investigations of wrongful acts associated with abbreviated new drug applications (ANDA's) for generic drugs, that a policy limiting validity assessments and deferral of substantive scientific review to applications in which the agency has actually discovered evidence of fraud or untrue statements would be inadequate. In each of the cases in which applicants provided illegal gratuities to FDA employees, the applicants were subsequently found to have submitted fraudulent submissions to the agency. In most instances
in which FDA discovered fraud or discrepancies in a firm's applications, further investigation revealed fraud and discrepancies in other applications.
FDA cannot assume that applications submitted under section 505(b) of the act, or under other statutory provisions, are different from ANDA's in that they are not susceptible to fraud and untrue statements. Indeed, FDA recently has discovered evidence of untrue statements of material facts in applications submitted for innovative new animal drugs. The fraud policy, therefore, applies to other agency review processes.
- Two comments cautioned that, for important single-source new chemical entities, approval should not be delayed or the product should not be withdrawn from the market in order to punish an applicant unless the underlying safety or efficacy of that product has been compromised by the improprieties.
Although the fraud policy states, as a general objective, that there should be deferral of substantive scientific review, it does not establish a requirement that each FDA center defer such review in all cases. FDA managers retain sufficient flexibility to continue scientific review and to avoid unnecessary delays in the approval of important new therapies. Each center is responsible for determining its own review priorities. Under the fraud policy, applications for new products that may yield important therapeutic or diagnostic gains, and are assigned a corresponding high review priority, can continue to receive priority review, even though they are subjected to a validity assessment. As under current policy, FDA centers also may consider the public health significance of the product in deciding whether and when to seek the removal of an approved product from the market to the extent they are provided such discretion under law.
- One comment pointed out that other regulatory agencies have authority to levy substantial civil penalties for willful misstatements. The comment recommended that FDA redouble its efforts to obtain authority from Congress to levy civil penalties against applicants for willful misconduct.
In the Safe Medical Devices Act of 1990, FDA was given authority to impose administrative civil penalties for violations pertaining to medical devices (21 U.S.C. 333(f)). In addition, HHS proposed legislation last year that would establish broad authority to assess administrative civil penalties in appropriate circumstances involving FDA regulated products. HHS currently is considering whether to propose similar legislation in the future.
- Several comments expressed concern about the threshold for invoking the provisions of the fraud policy. A few comments objected because there is no language in the policy to prevent FDA's indiscriminate or inappropriate use of the policy or to limit FDA's indiscriminate or inappropriate use of the policy or to limit FDA's actions under the policy. A few comments suggested that FDA should establish objective criteria or a reasonable basis for invoking the policy. One comment requested clarification of whether a criminal plea or conviction is necessary to trigger FDA deferral of review of that applicant's pending applications. One comment suggested that FDA defer review of an application based upon reliable information of misconduct, short of a criminal indictment or conviction. Comments also suggested that the policy could be invoked based on a referral, or contemplated referral, for criminal prosecution to the U.S. Department of Justice and based on a prior determination of fraudulent activity by a court of law or an agency finding of such misconduct after an opportunity for a hearing. One comment suggested that any misconduct showing a propensity for untruthfulness is inherently sufficient to defer action on an application.
FDA recognizes that it must have a reasonable basis for requiring validity assessments and deferring substantive review. The validity assessment process will be utilized only when there is a pattern or practice of wrongful conduct that raises a significant question regarding the reliability of the data in an application. The reasonableness of any decision to assess validity will depend on the facts. The fraud policy is not designed to set forth decision criteria or to otherwise restrict the prerogative of each center to question and investigate data submissions. Moreover, FDA questions the appropriateness of using specific milestones in criminal proceedings in determining when it is appropriate to assess data validity in pending applications or to defer substantive data review.
- A few comments suggested that, prior to invoking the provisions of the fraud policy, FDA be required to establish that there was an intent to defraud or that the applicant knowingly or materially engaged in the fraud or that such acts were part of a pattern or practice by the applicant. One comment pointed out that, although a material false statement might be made with intent to defraud, it is also possible that a material false statement could be made inadvertantly in an application without any intention to defraud or mislead. The comment recommended revising the fraud policy to exclude unintentional false statements. Several comments recommended that, if an applicant inadvertently and unknowingly made a false statement, omission, or clerical error in an application the applicant should be permitted to correct the statement without having to file a new application or implement other corrective actions.
Decisions to conduct validity assessments and defer substantive data review need not be based on a finding of intentional misconduct. Data may be unreliable due to sloppiness and inadvertent errors. A pattern of errors by an applicant involving material subject matter may raise a significant question regarding the general reliability of data in applications from that applicant.
The fraud policy does not address the issue of withdrawal of approval based on an inadvertent submission of an untrue statement of a material fact, a material omission, or a clerical error that could be readily corrected by amending the application. In such cases, FDA may not necessarily require a new application. Such decisions will continue to be made on a case-by-case basis, within the limits of the agency's administrative discretion.
- One comment stated that if intent to defraud cannot be proven, then it is important to determine whether the fraudulent data were substantive to the approval process. The comment noted that studies that are not pivotal or are not included in the "Summary Basis of Approval" should be extracted from the new drug application (NDA).
Whether or not there is fraud, FDA must assess reliability of data and materially of untrue statements in deciding whether to withdraw an approval. The agency's inquiry will not necessarily be limited to pivotal studies or studies included in the summary basis for approval. Fraudulent data in an application ordinarily should be remedied by withdrawing the application and submitting a new application, even if the data are associated with a "nonpivotal" study.
- One comment requested clarification of what effect, if any, an investigation by the Department of Justice, by a congressional oversight committee, or by a State enforcement agency would have on the procedures set forth in the policy. The comment suggested that FDA actions on applications containing fraudulent data should be withheld until these bodies of government complete any investigations they have regarding the applicant's conduct. The comment also suggested that when another body of government notifies FDA of an investigation regarding an applicant's conduct, FDA should consider that investigation as a basis for raising "a significant question" within the meaning of the fraud policy, but FDA should independently determine whether a significant question has been raised.
FDA does not agree that the agency should necessarily withhold actions on applications until other government bodies complete their investigations. FDA recognizes the need for government bodies to coordinate related investigations and acknowledges that such coordination may affect the nature and timing of FDA's decisions under the fraud policy. FDA agrees that when an investigation by another government body provides evidence of wrongful acts by an applicant, FDA ordinarily would need to determine independently the scope of the wrongful acts and their effects on applications submitted to the agency. FDA does not agree that these concerns should be addressed specifically in the fraud policy.
- One comment indicated that the policy may, in certain circumstances, create a disincentive for compliance. The comment cited the Department of Defense's voluntary disclosure program, which provides incentives for companies to act in a responsible way by establishing a company's voluntary disclosure as a positive factor to be considered by the government in determining whether to take legal action against the company. The comment contended that under FDA's policy, there is no incentive for an applicant to come forward with information to FDA if, for example, the applicant discovers fraud and believes the likelihood of discovery by FDA to be remote.
FDA agrees that the issue of incentives for voluntary disclosure is important, but does not agree that it should be addressed in the fraud policy. The fraud policy addresses concerns over reliability of data and agency review resources. The issue of incentives for voluntary disclosure should be addressed in a broader context that would involve agency policy on civil and criminal sanctions for misconduct.
- One comment requested that FDA differentiate between suspect applications for which corrective actions, including full cooperation by an applicant with FDA in all of its investigations, have already been taken by the applicant, and applications from applicants who have not so cooperated. The comment identified itself as a party to the generic drugs investigations and pointed out that it had been working cooperatively with FDA to bring its products and procedures into full compliance with FDA's requirements. The comment noted that FDA's Center for Drug Evaluation and Research (CDER) had indicated it would accept and process "in queue" new data submitted to supplement previously approved applications for which validity questions had been raised. The comment noted that it would be inappropriate at this point to require an applicant to return to the starting point by requiring resubmission of its application.
Under the fraud policy, FDA ordinarily will proceed to withdraw approval of applications found to contain fraudulent data. The agency is not prepared to make a general exception to this policy for applicants who cooperate with the agency in its investigations. The agency may distinguish between cooperative and uncooperative companies in other contexts involving civil and criminal sanctions. Moreover, the extent and nature of the applicant's cooperative and corrective actions are likely to influence the ability of the applicant to establish its credibility and the validity of its pending applications.
- One comment suggested that the final FDA fraud policy should contain a provision that explicitly calls for a revision of the policy upon passage of any legislation that affects the policy. The fraud policy, like any other statement, can be amended whenever appropriate. There is no reason to state this in the policy.
- One comment requested clarification of the language in paragraph 2 of the "Corrective Actions" section of the proposed policy, which indicated that applicants should, "Identify all individuals involved in committing, or otherwise culpable in the improper acts * * *." One comment requested clarification of the statement, "* * * ensure that they are removed from any substantive authority on matters under the jurisdiction of FDA." The comment pointed out that literally all of the operations of a pharmaceutical company are under the jurisdiction of FDA. The comment also requested FDA to clarify whether the agency expects such employees to be dismissed. A few comments expressed concern about protecting the constitutional rights of individuals by keeping confidential the identity of individuals identified as culpable until there has been a judicial determination that the individual has engaged in illegal behavior.
FDA has revised paragraph 2 of the corrective action provision of the final fraud policy to indicate that applicants should, "Identify all individuals who were or may have been associated with or involved in the wrongful acts and ensure that they are removed from any substantive authority on matters under the jurisdiction of FDA." This provision of the fraud policy neither states nor implies that the employment of such individuals must be terminated. FDA believes that applicants generally can identify or create alternative positions, place individuals on administrative leave, or make other suitable arrangements to remove individuals from substantive authority over matters under FDA's jurisdiction. FDA's policy regarding public disclosure of information about individuals who are suspected of illegal activities predates, and is beyond the scope of, the fraud policy.
- One comment requested that the fraud policy specify the confidentiality protections that will be provided during the course of a validity assessment.
The fraud policy does not establish any new confidentiality protection or supersede any existing provisions regarding confidentiality. The protection provided under current laws, regulations, and agency policy regarding disclosure of information in or related to marketing applications and to FDA investigations of potential violations of law need not be restated in the fraud policy.
- One comment noted that paragraph 4 of the corrective actions provision of the policy, which indicates applicants should commit, in writing, to an operating plan, requires much more detail for applicants to know what is expected.
FDA agrees with this comment. Guidance on conducting the internal review and implementing corrective action is provided in FDA's "Points to Consider for Internal Reviews and Corrective Action Operating Plans." The availability of this document is announced elsewhere in this issue of the Federal Register.
- One comment stated that the agency approve a protocol for the internal review (audit) prior to the applicant conducting the review.
FDA recommends that an applicant who conducts an internal review and initiates corrective action under this policy submit its audit plan and corrective action operating plan to the agency for review and comment prior to implementation.
- One comment contented that FDA does not have authority to require companies to hire outside consultants to conduct internal reviews.
The fraud policy does not impose any requirement on any applicant. The fraud policy describes measures that, based on FDA's past experience with applicants involved in a pattern or practice of wrongful acts, the agency ordinarily would expect an applicant to take to establish the reliability of data in its pending and approved applications.
FDA ordinarily recommends an outside consultant to encourage applicants to retain qualified individuals who have not been associated with the wrongful acts and who can efficiently conduct an unbiased, comprehensive audit that is designed to identify all instances of fraud, untrue statements of material facts, bribery, and illegal gratuities associated with applications. Although FDA also will audit the data and the data collection and recording practices, because of the agency's limited resources it may be useful for the applicant to conduct an initial audit to identify more quickly wrongful acts associated with applications. Thus, FDA recommends that the applicant supplement the agency's audit process by initiating a credible internal review involving an unbiased individual, or team of individuals, who are qualified by training and experience to conduct such a review. FDA emphasizes that the audits directed by the applicant are intended to supplement, and not substitute for, the agency's own investigation and audits.
- Several comments requested clarification of who is "qualified" and what is an "outside" consultant. One comment questioned whether a consultant on a yearly retainer for quality assurance and regulatory affairs work would be considered to be a qualified, outside consultant. A few comments suggested that an internal audit team might be qualified to conduct the internal review, provided the team was not responsible for preparing data for marketing applicants, was not involved in the wrongful acts, or was not responsible for auditing the applicant's quality assurance or scientific misconduct control procedures. Comments also noted that outside consultants are not always available or may not have expertise necessary to evaluate the questionable data. One comment suggested allowing the applicant to use their independent quality control unit to conduct the investigation and then, if necessary, an outside consultant.
Consultant qualifications are beyond the scope of the fraud policy. Such qualifications will depend on the nature of the investigations, the products involved, and other specific circumstances. FDA generally has advised that consultants be familiar with the product and operations to be audited, possess the proper mix of education, training, and experience to conduct an appropriate
audit, and be free of any past involvement in the wrongful acts or the activities being audited. Although the agency has not precluded the use of a quality assurance group in a remote part of a corporation to appropriately audit another part of the corporation, FDA believes that the mere appearance of bias or interest generally would suggest the use of outside personnel, i.e., persons not currently or previously employed by or affiliated with the applicant.
- One comment cautioned that FDA should not depend on reviews done internally by the applicant or by an outside consultant who is qualified by training and experience to conduct such a review. The comment referenced a case in which the consultant failed to uncover false statements or fraud in ANDA's.
As stated in response to comment 18, the applicant's internal review involving an outside consultant is intended to supplement, rather than replace, FDA's own investigations and audits. If the consultant conducts an unbiased, comprehensive audit, the reports from that audit may provide the agency with valuable information for determining the extent and focus of FDA's followup. FDA will not accept the consultant's findings without further agency investigation.
- One comment stated that FDA should inform an applicant of whether its choice of an outside consultant is acceptable to the agency.
The procedures for selecting consultants are beyond the scope of the fraud policy. FDA may request an applicant to explain its selection of a specific consultant (or a member of the audit team) if the consultant's experience and training appear to be incompatible with the audit requirements.
- One comment suggested that FDA should initially set a baseline requirement that the outside consultant be given access to all of the applicant's records and that the outside consultant should be required to analyze both the type of audit that has been conducted by the applicant internally and the audit itself.
The specific requirements for audits are beyond the scope of the fraud policy. Generally, if the applicant intends to conduct a credible, unbiased, and comprehensive audit, it is reasonable to expect that the consultant will have access to all records and the authority to review and analyze all processes or procedures that are identified as necessary and appropriate for the audit. Further guidance on conducting audits is provided in FDA's "Points to Consider for Internal Reviews and Corrective Action Operating Plans" referenced in response to comment 18.
- Several comments suggested that deferral of substantive review, pending completion of the validity assessment, should apply only to those applications for which there is a nexus between the application and the wrongful acts and should not apply to an applicant's entire product line. One of the comments further stated that it would be an unfair and inappropriate use of FDA's limited resources to conduct validity assessments for all applications from an applicant when a particular division, research group, or product type was implicated in alleged improper conduct. The comment cited as an example that fraud in connection with an ANDA should not trigger data validity assessments for an NDA.
A validity assessment will ordinarily be triggered by an agency determination that evidence of wrongful acts has raised questions about the reliability of data in an application or applications. The nature of the assessment and the determination of which applications are affected will depend on the facts of the particular case. Thus, the validity assessment process may be narrowly focused on one or a few applications when, for example, the agency concludes that one individual is wholly responsible for the wrongful acts and that the wrongful acts could have affected only the one or a few identified applications. On the other hand, the validity assessment process may be extensive if there is reason to believe that the scope of the wrongful acts may be broader.
FDA does not agree that validity assessment should necessarily be limited to applications for which there is a direct relationship between the wrongful acts and the questioned data. Based on the agency's recent experience, a pattern or practice of wrongful acts may raise a significant question regarding the reliability of many or all of the applications from an applicant.
- Two comments requested that FDA make a distinction between data generated by the sponsor and data obtained from third party contractors. The comments contended that the policy should not apply to wrongful acts by contractors to the sponsor, e.g., clinical investigators, contract research organizations, and independent laboratories, when the sponsor is unaware of the wrongful acts prior to submission of the data.
In determining the need for and scope of validity assessments, FDA will consider, among other things, the source of the false data, whether the applicant knew or should have known about the false data, and whether the same source has provided data in other applications.
- One comment noted that the policy should not apply to nonsupportive fraudulent data if the sponsor submits the data under the "full disclosure" requirement and identifies the data as nonsupportive and fraudulent.
FDA agrees that the submission of nonsupportive fraudulent data that is clearly and appropriately identified as nonsupportive and fraudulent, but is submitted to comply with full disclosure provisions of the act or implementing regulations, should not, in and of itself, be basis for a validity assessment. Such information, however, may prompt FDA to look carefully at the circumstances that led to the generation of the fraudulent data to determine whether other data in that or other applications may have been similarly affected. If FDA establishes a reasonable basis for determining that wrongful acts may have undermined the integrity of data other than that identified by the applicant, the agency may seek to verify the validity of the other data.
- One comment expressed concern that the fraud policy has been weakened by equivocating language. Examples include the statement indicating that when FDA finds fraud in an application, "the Agency intends ordinarily to refuse to approve the application * * *" and the statement indicating, "* * * the Agency intends generally to defer substantive review of data * * *" (emphasis added by comment). The comment contended that, to be credible, FDA's enforcement policy must at least implement, without equivocation, the scheme of deferrals and approvals the agency purports to adopt.
The fraud policy is a statement of general policy. Modifiers such as "ordinarily" and "generally" indicate that FDA managers have flexibility in implementing the policy. Under the policy, and consistent with current agency review policy, FDA center management can assess, as appropriate for each review process, the relative public health significance of the product under review and set review priorities for applications requiring validity assessments. Applications for products that may yield important therapeutic or diagnostic gains and that are on an expedited track for substantive data review, such as acquired immunodeficiency syndrome (AIDS) drugs, may continue to be reviewed and may receive priority attention with regard to any validity assessment. Thus, although FDA intends generally to defer substantive review of data in applications implicated by wrongful acts, the agency recognizes that such deferral may not be appropriate in all cases.
- One comment requested clarification on the process FDA will follow after it determines that the data in an application are unreliable. The comment noted that it appears as if that application will be put on hold until a new application, not simply new data, has been submitted. The comment contended that this seems unduly punitive and resource intensive, particularly if the data are faulty because of errors that were unintentional and inadvertent.
As discussed in response to comment 10, the fraud policy does not address the issue of rehabilitation of applications containing only unintentional or inadvertent errors.
- One comment requested that new applications submitted to replace false data not be subject to a validity assessment, provided the applicant fulfills the other corrective or remedial actions specified in the fraud policy.
The need for validity assessments for new applications will be determined based on the facts in each case, considering whether a pattern or practice of wrongful acts raises a significant question about the validity of data in the new applications as well as the previously submitted applications.
- One comment interpreted the fraud policy as applying only to applications for marketing and not to other data submissions such as over-the- counter (OTC) review submissions or citizen petitions. The comment noted that if the policy extends to these other submissions, FDA must provide additional notice and opportunity for comment.
FDA advises that the fraud policy was developed as a statement of general policy for FDA managers to take strong measures to ensure the reliability of data submitted in the context of the agency's licensing, approval, and classification mechanisms. These include the following: (References to the Public Health Service Act are identified. All other references are to the act.)
- Section 510(k) (21 U.S.C. 360(k)), which implements sections 513(f) (21 U.S.C. 360c(f)) and 513(i) (21 U.S.C. 360c(i)) for determining whether a medical device is substantially equivalent to a marketed medical device;
- Section 513 (classification of medical devices);
- Section 514 (21 U.S.C. 360d) (Class II medical devices); d. Section 515 (21 U.S.C. 360e) (class III medical devices); e. Section 519 (21 U.S.C. 360i) (records and reports for medical devices);
- Section 520(g) (21 U.S.C. 360j(g)) (investigational medical devices);
- Section 409 (21 U.S.C. 348) (food additives);
- Section 706 (21 U.S.C. 376) (color additives);
- Section 505(b) (21 U.S.C. 355(b)) (new human drugs); j. Section 505(j) (21 U.S.C. 355(j)) (new human generic drugs); k. Section 505(i) (21 U.S.C. 355(i)) (investigational human drugs);
- Section 512(b) (21 U.S.C. 360b(b)) (new animal drugs); m. Section 512(m) (21 U.S.C. 360b(m)) (medicated animal feed); n. Section 512(n) (21 U.S.C. 360b(n)) (new animal generic drugs);
- Section 512(j) (21 U.S.C. 360b(j)) (investigational animal drugs);
- Section 507 (21 U.S.C. 357) (antibiotics);
- Section 801(e) (2) (21 U.S.C. 381(e) (2)) (exportation of certain medical devices);
- Section 802 (21 U.S.C. 382) (exportation of unapproved new human drugs and new animal drugs, and unlicensed biological products);
- Section 802(f) (21 U.S.C. 382(f)) (drugs for tropical disease);
- Section 351 of the Public Health Service Act (biological products);
- Section 351(h) of the Public Health Service Act (exportation of partially processed biological products); and
- Section 351 of the Public Health Service Act (establishments that manufacture biological products).
Although the fraud policy is not specifically directed to submissions related to OTC drugs not approved under sections 505(b) and 505(j) of the act or to citizen petitions, the agency may conduct validity assessments to assess reliability of data in those submissions or any other submissions. FDA does not agree that additional opportunity for comment must be provided on possible agency efforts to assess reliability of data in those submissions. As discussed in the response to comment number 28, FDA recognizes that for some review processes the applicant is required to provide the agency with all known data in the public domain. The agency further recognizes that the applicant may have limited information about the reliability of such data and would generally not expect the applicant to vouch for its validity.
- One comment suggested that the fraud policy indicate that FDA will not make certain other administrative approval determinations, such as those relating to Federal procurement under the government-wide quality assurance program, export certificates, etc., until the applicant has taken appropriate corrective actions and FDA has verified that the corrections are satisfactory.
The fraud policy is designed generally, to ensure reliability of data in applications to FDA and was not designed to address government procurement or other FDA administrative processes. The agency will, however, consider the violative acts addressed by the fraud policy as appropriate under those administrative processes.
- One comment suggested that FDA's publicly stated fraud policy should substitute for FDA's unofficial domestic alert list. The comment noted that significant consequences, such as FDA's refusal to process a pending application, to issue export certificates, and to approve a listed company for participation in government contract bids can result from placement of a firm on the domestic alert list, and these consequences are imposed without any due process measures or publicly stated policy. Another comment expressed concern that firms were not able to determine whether they have been placed on FDA's "Alert List." The fraud policy is a general policy directive designed to ensure reliability of data in applications submitted to the agency and cannot serve as a substitute for the agency's alert system. The concerns expressed about the agency's alert systems are beyond the scops of the fraud policy.
- One comment suggested that the scope of FDA's fraud policy be limited to fraudulent activities. The comment noted that the proposed corrective actions suggest that an applicant develop written procedures to assure compliance with current good manufacturing practices (CGMP's) and adherence to application requirements and demonstrate such compliance in FDA inspections. The comment indicated that FDA's other enforcement "tools" are better suited to preventing, curbing, and punishing noncompliance with CGMP's or with application requirements.
The fraud policy is not directed toward CGMP violations, generally. In implementing corrective actions based on wrongful acts addressed by the fraud policy, however, applicants may need to revise manufacturing practices, hiring practices, training procedures, and other areas of operations to ensure reliability of data submitted to FDA and to assure safety and, when applicable, the effectiveness of marketed products.
- Three comments requested that the fraud policy require that all applications, not just abbreviated new drug applications (ANDA's) submitted under section 505(j) of the act (21 U.S.C. 355(j)), that are not found to contain fraudulent data will be returned to the review queue in the same position they were removed from the queue. One comment asked FDA to clarify how
NDA's will be treated so that the time period consumed in application review is not extended.
The fraud policy does not address the assignment of application within any review queue. In the preamble to the proposed fraud policy, the agency stated that, for applications submitted under section 505(j) of the act (21 U.S.C. 355(j)), if the agency determined that the data in the application are reliable, the agency would expect to return that application to the review queue in the position it occupied in the review queue, minus the time required for the agency's validity determination. The queue system used for determining review priorities for ANDA's is designed specifically for that review process and is currently being reevaluated by CDER. Each FDA center develops its own procedures for establishing priorities of review.
- Three comments expressed concern regarding the return of premarket applications to the review process following validity assessment, particularly when rights to exclusivity may exist. The comments contended that, if the agency's suspicions of fraud prove to be unfounded, an applicant's legitimate expectation of obtaining the first approval may be jeopardized.
As discussed in response to comment 35, the fraud policy does not address the assignment of an application within a review queue. Each affected center will establish its procedures for implementing the fraud policy. Moreover, the comments' reference to "an applicant's legitimate expectation of obtaining the first approval" is unclear. Because of the myriad of issues that may arise during review of any application, there is no guarantee that the first application submitted to FDA will be the first approved.
- One comment stated that, when data in an application are determined to be invalid and a new application is submitted, company executives should not be required to certify the accuracy of the data on the new application because no one can have personal knowledge of all of the data in the application. The comment indicated that, at most, the person submitting the application should certify that the company has taken reasonable steps both to ensure the validity of data generated by the applicant and to audit data prepared by others for inclusion in the application.
FDA recognizes that the official who certifies the truth and accuracy of a new application is not likely to have personal knowledge of all matters related to the development and analysis of the data in the application. The official who signs the application certification is responsible, however, for ensuring that appropriate procedures and controls have been developed and implemented to ensure that data submitted in support of marketing applications are reliable and to ensure that wrongful acts such as those that affected data reliability do not recur. FDA expects these certifications to be based on the signing officials's knowledge that such procedures and controls are in place and are implemented properly.
- One comment addressed paragraph 4 of the corrective action provision of the fraud policy, which indicates the applicant's chief executive officer should commit, in writing, to an operating plan that "* * * will, as appropriate, address procedures to preclude future instances of fraud and noncompliance with regulatory requirements for approved applications, as well as procedures to preclude any recurrences of other violations which may have been found * * *" (55 FR 52323). The comment stated that this would be difficult for any executive to sign if it is meant to be a guarantee that there will be no future instances of fraud or noncompliance.
FDA realizes that commitment to, and implementation of, an operating plan will not guarantee there will be no future instances of fraud or noncompliance. The commitment to a corrective action operating plan signifies a commitment by the applicant to implement and monitor reasonable and appropriate procedures and controls that will correct identified problems and will, to the extent possible, deter future recurrence of wrongful acts such as those that affected data reliability.
- One comment requested clarification of whether the applicant's operating plan would also cover regulatory issues unrelated to the fraudulent activity.
The operating plan should identify corrective actions the applicant will implement to ensure that data submitted to support their marketing applications are reliable and that wrongful acts that affect data reliability do not recur. FDA may request the applicant to include in the operating plan procedures to correct other violations and to prevent recurrence of these violations, even though the violations are not directly related to the wrongful acts or to data reliability.
- One comment requested that the policy provide a timetable fro FDA reinspections to ensure that corrective actions are reviewed in an expeditious manner. FDA believes it is impractical to incorporate into the fraud policy a timetable for FDA reinspection. FDA inspections will be scheduled as appropriate in each case based on consideration of a variety of factors, including FDA's review and inspection priorities and the applicant's responsiveness in providing FDA with information regarding progress on implementation of the corrective action operating plan.
- Two comments requested FDA to clarify whether recalls will be required only for those products that are directly associated with the application that contains unreliable data.
FDA may suggest voluntary recall, or may initiate an FDA-requested recall, of any product that is marketed, based on an application that contains data that are deemed by the agency to be unreliable. Decisions regarding products that should be recalled will be made on a case-by-case basis, consistent with FDA's current recall authority, policies, and procedures.
- The comments requested clarification of whether retesting would be required only if the wrongful acts relate directly to the testing of that product.
FDA may suggest or require retesting of any product that is marketed based on an application containing test data that have been called into question directly or indirectly. Decisions regarding the need for product retesting will be made on a case-by-case basis.
- With respect to paragraph 4 of the corrective actions provision of the fraud policy, one comment recommended that the agency permit adequate time to institute significant company-wide steps, such as new programs for the reeducation of employees and the creation of new documentation, but not preclude reinstitution of approval procedures for an application if the firm is implementing all necessary corrective steps.
FDA expects the applicant's corrective action operating plan to identify appropriate steps for ensuring the integrity of its applications and marketed products. A timetable for implementing the corrective action operating plan should be established by the applicant. Timeframes for implementing appropriate programs for reeducation of employees and for creating new documentation programs should be incorporated into the action plan timetable. The extent to which these programs will need to be fully implemented, prior to an FDA determination that the data in a particular application are valid, will be evaluated for each particular case.
- One comment requested that FDA notify the applicant when the validity assessment has been concluded and review has resumed according to normal procedures.
FDA intends to notify the affected applicant of the agency's satisfactory conclusion of any validity assessment.
II. Final Policy
FDA's CPG's are not intended to create or confer any rights, privileges, or benefits on or for any private person, but are intended merely for internal FDA guidance. It is FDA's usual practice to publish in the Federal Register only a notice of availability for CPG's. However, because the full text of the proposed fraud policy was published in the Federal Register and because revisions have been made to the proposed policy, FDA is publishing the full text of CPG 7150.09 that incorporates the final fraud policy as follows:
Food and Drug Administration Guide 7150.09 Compliance Policy Guides
CHAPTER 50-GENERAL POLICY
Subject: Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities
The House Subcommittee on Oversight and Investigations began an investigation of wrongful acts involving some manufacturers of generic drugs and some employees of the Food and Drug Administration (FDA) during July 1988. As a result of those investigations and investigations conducted by FDA, four FDA employees were found to have accepted illegal gratuities from generic drug companies, and to date, eleven generic drug companies were found to have falsified data submitted in premarket applications to FDA.
In FDA's investigations, which began as inquiries into illegal gratuities and questionable data submissions, the agency discovered broad patterns and practices of fraud in the applicants' abbreviated new drug applications. The discovery of this extensive pattern of fraudulent data submissions prompted FDA to develop a program (1) to ensure validity of data submissions called into question by the agency's discovery of wrongful acts such as fraud, untrue statements of material fact, bribery, and illegal gratuities and (2) to withdraw approval of, or refuse to approve, applications containing fraudulent data. This guide sets forth the agency's general approach to applications that have been called into question by such wrongful acts and applications found to contain fraudulent data.
The terms applicant and application are used broadly in this policy statement. References to the applicant include any person within the meaning of section 201(e) of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 321(e)) who submits to FDA data or other information to influence or support an agency decision regarding approval to market an FDA-regulated product. Actions by an applicant's employees or agents are considered actions by the applicant. References to the application include any application, petition, amendment, supplement, or other submission made by an applicant to an agency review process in support of the approval or marketing of a regulated product. These review processes include, but are not limited to, new drug and new animal drug approvals, biological product and establishment licensing, premarket notification, classification, and premarket approval of medical devices, food additive petitions, and color additive petitions. References to data in an application include all data and other information submitted in or in relation to, or incorporated by reference in, the application.
Actions on the part of an applicant to subvert the integrity of an FDA review process through acts such as submitting fraudulent applications, making untrue statements of material facts, or giving or promising bribes or illegal gratuities may call into question the integrity of some or all of the applicant's submissions to the agency. In such cases, FDA will conduct an investigation to identify all instances of wrongful acts and to determine the extent to which the wrongful acts may be affected approved or pending applications. The scope of FDA's investigation will be determined based on the nature of the offense and will focus on the reliability of the applicant's research and manufacturing data. If the wrongful acts have raised a significant question regarding reliability of data in some or all of the applicant's pending applications, FDA ordinarily will conduct validity assessments of those applications.
FDA generally intends to defer substantive scientific review of the data in a pending application undergoing a validity assessment until the assessment is complete and questions regarding reliability of the data are resolved. To approve an application, FDA generally must determine that the applicant is capable of producing a safe and, for some types of applications, an effective or functional product based on, among other things, testing and other data provided by the applicant and the adequacy of the applicant's manufacturing processes and controls. The principal basis for this determination is the data in the application; therefore, the reliability of data is of critical importance. If the agency determines that the criteria for approval cannot be met because of unresolved questions regarding reliability of data, the agency will not approve the application.
When FDA finds, based on fraudulent data in an application, that the data in the application are unreliable, the agency intends ordinarily to exercise its authority, under applicable statutes and regulations, to refuse to approve the application (in the case of a pending application) or to proceed to withdraw approval (in the case of an approved application), regardless of whether the applicant attempts to replace the unreliable data with a new submission in the form of an amendment or supplement. Thus, if the applicant wishes to replace the false data with a new submission, the new submission should be in the form of a new application. The new application should identify the parts of the original application that were found to be false. The truthfulness and accuracy of the new application should be certified by the president, chief executive officer, or other official most responsible for the applicant's operations.
FDA also may seek recalls of marketed products and may request new testing of critical products. For drugs, for example, retesting may be requested for products that are difficult to manufacture or that have narrow therapeutic ranges. FDA may pursue other actions, including seizure, injunction, civil penalties, and criminal prosecution, under the act or other applicable laws, as necessary and appropriate.
The corrective actions an applicant will be expected to take will depend upon the facts and circumstances of each case, the nature of the wrongful acts, the nature of the data under consideration, and the requirements of the particular review process. Applicants who engage in wrongful acts ordinarily will need to take the following corrective actions to establish the reliability of data submitted to FDA in support of pending applications and to support the integrity of products on the market:
- Cooperate fully with FDA and other Federal investigations to determine the cause and scope of any wrongful acts and to assess the effects of the acts on the safety, effectiveness, or quality of products;
- Identify all individuals who were or may have been associated with or involved in the wrongful acts and ensure that they are removed from any substantive authority on matters under the jurisdiction of FDA;
- Conduct a credible internal review designed to identify all instances of wrongful acts associated with applications submitted to FDA, including any discrepancies between manufacturing conditions identified in approved applications and manufacturing conditions during actual production. The internal review is intended to supplement FDA's ongoing, comprehensive investigation to identify all instances of wrongful acts. The internal review should involve an outside consultant or a team of consultants who are qualified by training and experience to conduct such a review. All oral or written reports related to the review that are provided by the consultant to the applicant should be made available simultaneously to FDA for independent verification; 4. Commit, in writing, to developing and implementing a corrective action operating plan to assure the safety, effectiveness, and quality of their products. This commitment ordinarily will be in the form of a consent decree or agreement, signed by the president, chief executive officer, or other official most responsible for the applicant's operations, and submitted to FDA. The corrective action operating plan will, as appropriate, address procedures and controls to preclude future instances of wrongful acts and noncompliance with regulatory requirements for approved applications, as well as procedures and controls to preclude any recurrences of other violations which may have been found (e.g., a comprehensive ethics program).
FDA intends to reinspect the applicant to determine that the internal review has been satisfactorily completed and that the applicant's written corrective action operating plan has been satisfactorily implemented. Such inspections should disclose positive evidence (e.g., effective management controls, standard operating procedures, and corroborating documentation) that the applicant's data are reliable and that the applicant can be expected to manufacture products in compliance with current good manufacturing practices and application requirements. In addition, FDA may request an applicant to commit in writing to retest any product (including, in the case of drugs, bioequivalence and bioavailability retesting), as FDA deems appropriate.
An applicant also may be requested under existing regulatory procedures to recall products affected by the wrongful acts, or otherwise lacking adequate assurance of safety, effectiveness, or quality.
Dated: July 1, 1991.
David A. Kessler, Commissioner of Food and Drugs.
[FR Doc. 91-21592 Filed 9-9-91; 8:45 am]
BILLING CODE 4160-01-M