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U.S. Department of Health and Human Services

Inspections, Compliance, Enforcement, and Criminal Investigations

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01/06/1994

[Federal Register: January 6, 1994]

 

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

 

Food and Drug Administration

[Docket No. 92N-0416]

 

David J. Brancato; Denial of Hearing and Final Debarment Order

 

AGENCY: Food and Drug Administration, HHS.

 

ACTION: Notice.

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SUMMARY: The Deputy Commissioner for Operations of the Food and Drug

Administration (FDA) is denying a request for a hearing and issuing a

final order under section 306(a) of the Federal Food, Drug, and

Cosmetic Act (the act) (21 U.S.C. 335a(a)) permanently debarring Mr.

David J. Brancato, 13010 Atlantic Ave., Rockville, MD 20851, from

providing services in any capacity to a person that has an approved or

pending drug product application. FDA bases this order on a finding

that Mr. Brancato was convicted of a felony under Federal law for

conduct relating to the development or approval, including the process

for development or approval of a drug product; and relating to the

regulation of a drug product under the act.

 

EFFECTIVE DATE: January 6, 1994.

 

ADDRESSES: Application for termination of debarment to the Dockets

Management Branch (HFA-305), Food and Drug Administration, 12420

Parklawn Dr., rm. 1-23, Rockville, MD 20857.

 

FOR FURTHER INFORMATION CONTACT: Diane M. Sullivan, Center for Drug

Evaluation and Research (HFD-366), Food and Drug Administration, 7500

Standish Pl., Rockville, MD 20855, 301-594-2041.

 

SUPPLEMENTARY INFORMATION:

 

I. Background

 

David J. Brancato, a former review chemist with FDA's Division of

Generic Drugs, pled guilty and was sentenced on January 5, 1990, for

receiving unlawful gratuities, a felony offense under 18 U.S.C.

201(c)(1)(B). This conviction was based on Mr. Brancato's acceptance of

payment of approximately $4,300 from senior officials of generic drug

manufacturers, Par Pharmaceutical, Inc. (Par), and its subsidiary, Quad

Pharmaceuticals, Inc. (Quad), while Mr. Brancato was involved in the

regulation of Par's and Quad's drug products and while he was

specifically responsible for reviewing Par's and Quad's applications to

determine whether those applications met certain statutory standards

for approval.

 

On December 12, 1992, Mr. Brancato received a certified letter from

the Deputy Commissioner for Operations offering Mr. Brancato an

opportunity for a hearing on the agency's proposal to issue an order

under section 306(a) of the act debarring him from providing services

in any capacity to a person that has an approved or pending drug

product application. FDA based the proposal to debar Mr. Brancato on

its finding that he was convicted of a felony under Federal law for

conduct relating to the development, approval, and regulation of Par's

and Quad's drug products.

 

The certified letter further informed Mr. Brancato that his request

for a hearing could not rest upon mere allegations or denials but must

present specific facts showing that there was a genuine and substantial

issue of fact requiring a hearing. The letter also notified Mr.

Brancato that if it conclusively appeared from the face of the

information and factual analyses in his request for a hearing that

there was no genuine and substantial issue of fact which precluded the

order of debarment, FDA would enter summary judgment against him and

deny his request for a hearing.

 

In a letter dated December 21, 1992, Mr. Brancato requested a

hearing and submitted arguments and information in support of his

hearing request. In his request for a hearing, Mr. Brancato

acknowledges that he was convicted of a felony under Federal law as

alleged by FDA; however, he argues that FDA's findings are incorrect

and that the agency's proposal to debar him is unconstitutional.

 

The Deputy Commissioner for Operations has considered Mr.

Brancato's arguments and concludes that they are unpersuasive and fail

to raise a genuine and substantial issue of fact requiring a hearing.

The legal arguments that Mr. Brancato offers do not create a basis for

a hearing because hearings are not granted on matters of policy or law,

but only on genuine and substantial issues of fact (see 21 CFR

12.24(b)(1)). Additionally, the material submitted in support of Mr.

Brancato's hearing request does not justify a hearing because hearings

will not be granted on the basis of mere allegations, denials, or

general descriptions of positions and contentions (see 21 CFR

12.24(b)(2)). Moreover, all of Mr. Brancato's arguments are

unconvincing for the reasons discussed below.

 

II. Conclusions of the Deputy Commissioner Concerning Mr. Brancato's

Arguments in Support of a Hearing

 

A. Mandatory Debarment of Individuals Applies Retroactively to

Convictions Occurring Within the Past 5 Years

 

Mr. Brancato first alleges that the debarment provisions do not

apply to conduct which occurred prior to the effective date of the act.

Mr. Brancato does not support this claim with further argument.

 

The provision of the act applicable to Mr. Brancato is section

306(a)(2) of the act. Initiation of debarment proceedings under that

section is not limited by when the conduct underlying the conviction

occurred, but rather, by when the conviction occurred. Under section

306(a)(2) of the act, debarment proceedings must be initiated within 5

years of the conviction (see section 306(l)(2) of the act). Debarment

of Mr. Brancato is appropriately based upon his January 5, 1990,

conviction, occurring less than 4 years ago. Because the 5-year statute

of limitations has not expired, Mr. Brancato's argument fails to raise

a genuine and substantial issue of fact.

 

It is unclear from Mr. Brancato's first argument whether he

intended to further allege that the debarment provisions do not apply

retroactively to convictions occurring prior to the effective date of

the act. Nevertheless, this issue is addressed below.

 

Congress intended section 306(a)(2) of the act to be retroactive as

evidenced by comparing section 306(a)(2) of the act, applicable to

mandatory debarment of individuals, to section 306(a)(1) of the act,

applicable to mandatory debarment of corporations. The act treats

corporations differently from individuals with respect to

retroactivity. Mandatory debarment of corporations under section

306(a)(1) of the act is not retroactive because debarment of

corporations is explicitly limited to convictions occurring ``after the

date of enactment.'' Conversely, section 306(a)(2) of the act,

pertaining to mandatory debarment of individuals, does not contain any

such limiting language. The exclusion of language barring retroactivity

for section 306(a)(2) implies that section 306(a)(2) of the act was

intended by Congress to be implemented retroactively.

 

In addition, section 306(l)(2) of the act shows that section

306(a)(2), pertaining to mandatory debarment of individuals, was

intended to be retroactive. Section 306(l)(2) of the act sets out the

effective dates for each provision of the act. As noted above, the

effective dates pertaining to section 306(a)(2) of the act state that

any relevant conviction may be used as the basis for mandatory

debarment of individuals, so long as the conviction occurred no more

than 5 years prior to the initiation of debarment proceedings. Section

306(l) of the act states that certain other debarment provisions shall

not be retroactive by limiting application of those provisions to

actions occurring on or after June 1, 1992. Thus, where Congress

intended a section not to be retroactive, it provided an effective date

in section 306(l) of the act. The omission of an effective date for

section 306(a) of the act and the inclusion of an effective date for

other sections reveals Congress' intent that this section be

retroactive.

 

Thus, as intended by Congress, and as supported by the explicit

language of the act, mandatory debarment applies retrospectively and,

thus, mandatory debarment applies to Mr. Brancato's conviction, which

occurred within 5 years prior to the effective date of the act.

Accordingly, Mr. Brancato's claim fails to raise a genuine and

substantial issue of fact.

 

B. The Decision To Debar Mr. Brancato Was Based Upon the Relevant

Considerations and Was Made by an Authorized Designee of the Secretary

 

Mr. Brancato next argues that notice to him of his proposed

debarment does not reflect consideration by the Secretary of Health and

Human Services or his designee. Mr. Brancato does not support this

claim with facts or further argument.

 

Sections 201 through 903 of the act (21 U.S.C. 321 through 394)

contain numerous grants of authority to the Secretary of the Department

of Health and Human Services (the Secretary). The Secretary has, in

general, delegated this authority to the Commissioner of Food and Drugs

with authority to redelegate to the Deputy Commissioner for Operations

and other officers of FDA (see 21 CFR 5.10 and 5.20). The authority

conferred in section 306 of the act is delegated to the Commissioner,

even though the legislation formally names the Secretary. The

Commissioner has redelegated that authority to the Deputy Commissioner

for Operations (21 CFR 5.20(b) and 5.20(g)(1)).

 

The notice of proposed debarment and opportunity for a hearing

letter received by Mr. Brancato on December 12, 1992, was issued

legally under authority delegated to FDA's Deputy Commissioner for

Operations.

 

The decision to propose debarment of Mr. Brancato was appropriately

based upon the following relevant considerations: (1) The nature of the

conviction (a felony under Federal law) and (2) the conduct underlying

the conviction (conduct relating to the development, approval, and

regulation of Par's and Quad's drug products) (see section I. of this

document). Because the Deputy Commissioner for Operations, an

authorized designee of the Secretary, considered the relevant factors

in making the determination to propose debarment, Mr. Brancato's claim

that the notice of his proposed debarment does not reflect

consideration by the Secretary or his designee fails to raise any issue

as to the validity of this proceeding and fails to raise a genuine and

substantial issue of fact.

 

C. Mr. Brancato's Conviction Subjects Him to the Mandatory Debarment

Provisions Not to the Permissive Debarment Provisions

 

Mr. Brancato further contends that the conduct for which he was

convicted is more appropriately conduct subject to permissive debarment

under 21 U.S.C. 306(b)(2)(B) of the act rather than to mandatory

debarment. Mr. Brancato fails to support this statement with an

explanation or further argument.

 

Section 306(a)(2)(A) and (a)(2)(B) of the act mandates that FDA

debar an individual if the Secretary finds that the individual has been

convicted of a felony under Federal law for conduct: (1) Relating to

the development or approval, including the process for development or

approval, of any drug product; and (2) otherwise relating to the

regulation of any drug product under the act.

 

As discussed above, Mr. Brancato's conviction for receiving

unlawful gratuities triggers the section 306 (a)(2) (A) and (a)(2)(B)

of the act mandatory debarment provisions. An individual convicted of

this crime will not be considered a candidate for permissive debarment

unless FDA finds that the conduct underlying the conviction did not

relate to the development or approval, or the regulation of any drug

product (see section 306(b)(2)(B)(ii) of the act). Absent such a

finding, mandatory debarment based upon such a conviction must follow.

Because FDA finds that the conduct which served the basis for Mr.

Brancato's conviction did relate to the development and approval and

the regulation of Par's and Quad's drug products, the mandatory

provisions, rather than the permissive provisions, are applicable in

this case. Mr. Brancato acknowledges that he was convicted of a felony

under Federal law. Furthermore, he does not dispute FDA's finding that

the conduct underlying his conviction relates to the development and

approval and the regulation of Par's and Quad's drug products.

Therefore, Mr. Brancato's claim fails to raise a genuine and

substantial issue of fact.

 

D. The Statutory Criteria Pertaining to Permissive Debarment Are Not

Relevant to Mr. Brancato's Mandatory Debarment Action

 

Mr. Brancato states the following: (1) There is no evidence that

the Secretary considered the statutory criteria for determining

appropriateness and period of debarment for nonmandatory (permissive)

debarment, (2) Mr. Brancato took voluntary steps to mitigate the impact

of his offense on the public, and (3) Mr. Brancato has no prior

convictions. Mr. Brancato fails to support these three statements with

further argument.

 

As discussed, the mandatory debarment provisions, not the

permissive debarment provisions, apply in this case. The criteria

pertaining to permissive debarment, which include evidence of

mitigation and prior convictions, may not be considered in making the

decision to initiate mandatory debarment proceedings. Because Mr.

Brancato argues for the consideration of irrelevant permissive

debarment criteria, not applicable to Mr. Brancato's mandatory

debarment action, his claim fails to raise a genuine and substantial

issue of fact.

 

E. Mr. Brancato's Plea Agreement With the Government Does Not Preclude

His Debarment

 

In his next argument, Mr. Brancato states that his guilty plea and

cooperation with the government were predicated on the assumption that

no civil penalties would flow from his cooperation and that debarment

would render his guilty plea subject to collateral attack and

jeopardizes the integrity of the judicial process. He does not support

this claim with evidence or citations.

 

Mr. Brancato's claim is completely unsubstantiated. The April 13,

1989, plea agreement represents the complete and final embodiment of

Mr. Brancato's and the government's intention; the agreement explicitly

states that ``[t]here are no other agreements, promises, undertakings

or understandings between Mr. Brancato and this Office.'' Contrary to

Mr. Brancato's ``assumption,'' the terms of the plea agreement do not

preclude subsequent civil or administrative actions, including

debarment. The terms bar only subsequent criminal action. Because the

plea agreement is the complete and final expression of the compromise

between Mr. Brancato and the government, and because the agreement does

not preclude debarment, Mr. Brancato's claim fails to raise a genuine

and substantial issue of fact.

 

F. Debarment of Mr. Brancato Is Not Prohibited by the Ex Post Facto

Clause

 

In his final argument, Mr. Brancato states, ``individuals who

cooperate with the government should not be subject to sanctions of

this kind ex post facto.'' Mr. Brancato fails to support this statement

with an explanation or case citation.

 

Although it is unclear from this statement what point Mr. Brancato

is attempting to make, two separate arguments may be implied: That his

cooperation exempts him from the debarment provisions, and that his

debarment violates the ex post facto clause of the United States

Constitution. Both arguments are discussed individually below.

 

As discussed above, the mandatory debarment provisions, not the

permissive debarment provisions, apply in this case. Cooperation with

the government may not be considered in the decision to initiate

mandatory debarment proceedings. (Cooperation may, however, be

considered in determining whether to grant special early termination of

debarment, under section 306(d)(4)(C) of the act, to individuals and as

evidence of mitigation, in determining appropriateness and period of

permissive debarment.) Because Mr. Brancato's cooperation is immaterial

here, his claim fails to raise a genuine and substantial issue of fact.

 

Mr. Brancato further suggests that the ex post facto clause of the

U.S. Constitution prohibits application of section 306(a)(2) of the act

to him because this section was not in effect at the time of Mr.

Brancato's criminal conduct. Section 306(a)(2) of the act was enacted

on May 13, 1992. The conduct underlying Mr. Brancato's conviction

occurred in 1987, and his conviction occurred in 1990.

 

An ex post facto law is one which punishes acts occurring prior to

enactment of the law, or which adds a new punishment to one that was in

effect when the crime was committed. (Ex Parte Garland, 4 Wall. 333,

377, 18 L. Ed. 366 (1866). Collins v. Youngblood, 110 S.Ct. 2715

(1990).) Retroactive application of a law to serve a remedial purpose

does not violate the ex post facto clause.

 

Because debarment is intended as a remedy, rather than a

punishment, retroactive application of the mandatory debarment

provisions of the act is not prohibited by the ex post facto clause.

 

Debarment was clearly intended to be remedial. Congress created the

Generic Drug Enforcement Act of 1992 (GDEA) in response to findings of

fraud and corruption in the generic drug industry. Both the language of

the GDEA itself and its legislative history reveal that the purpose of

the debarment provisions i