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U.S. Department of Health and Human Services

Inspections, Compliance, Enforcement, and Criminal Investigations

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11/08/1994

[Federal Register: November 8, 1994]

 

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. 92N-0417]

 

Ashok Patel; Denial of Hearing and Final Debarment Order

 

AGENCY: Food and Drug Administration, HHS.

 

ACTION: Notice.

 

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SUMMARY: The Food and Drug Administration (FDA) is denying Mr. Ashok

Patel's request for a hearing and is issuing a final order under the

Federal Food, Drug, and Cosmetic Act (the act) permanently debarring

Mr. Ashok Patel, 27 Ranch Rd., Upper Saddle River, NJ 07458, from

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

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

that Mr. Patel 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: November 8, 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: Megan L. Foster, 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

    

Mr. Ashok Patel, a former senior vice-president of Par

Pharmaceuticals, Inc. (Par), pled guilty and was sentenced on October

18, 1989, for giving an unlawful gratuity to a public official, a

felony offense under 18 U.S.C. 201(c)(1)(A). The basis for this

conviction was Mr. Patel's payment of approximately $4,500 to an FDA

chemistry review Branch Chief (public official) who was involved in the

regulation of Par's drug products and who was specifically responsible

for supervising the chemists who reviewed Par's applications to

determine whether those applications met certain statutory standards

for approval.

 

In a certified letter received by Mr. Patel on December 12, 1992,

the Interim Deputy Commissioner for Operations offered Mr. Patel an

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

under section 306(a) of the act debarring Mr. Patel 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. Patel 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

drug products.

 

The certified letter also informed Mr. Patel that his request for a

hearing could not rest upon mere allegations or denials, but it must

present specific facts showing that there was a genuine and substantial

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

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 January 7, 1993, Mr. Patel requested a hearing,

and in a letter dated February 11, 1993, Mr. Patel submitted arguments

and information in support of his hearing request. In his request for a

hearing, Mr. Patel acknowledged that he was convicted of a felony under

Federal law as alleged by FDA. However, Mr. Patel argued that FDA's

findings based on that conviction are incorrect and that the agency's

proposal to debar him is unconstitutional.

 

The Interim Deputy Commissioner for Operations has considered Mr.

Patel's arguments and concludes that they are unpersuasive and fail to

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

Moreover, the legal arguments that Mr. Patel offers do not create a

basis for a hearing (see 21 CFR 12.24(b)(1)).

 

Mr. Patel's arguments are discussed below in section II of this

document.

 

II. Mr. Patel's Arguments in Support of a Hearing

 

A. Mr. Patel's Conduct

   

Mr. Patel first alleges that FDA's findings are incorrect because

his conviction does not involve conduct relating to the development,

approval, or regulation of a drug product under the act. Mr. Patel

claims that the conviction was based on his giving an illegal gratuity

in response to repeated requests of the public official for personal

reasons unrelated to the drug approval process.

 

This argument is unconvincing and fails to raise a genuine and

substantial issue of fact. Mr. Patel pled guilty to and was convicted

of violating 18 U.S.C. 201(c)(1)(A) for his payment of approximately

$4,500 to an FDA chemistry review Branch Chief who was involved in the

regulation of Par's drug products (21 U.S.C. 335a(l)).

 

In order to be convicted under 18 U.S.C. 201(c)(1)(A), one must

give, otherwise than as provided by law for the proper discharge of

official duty, something of value to a public official because of an

official act performed or to be performed by such official. ``Official

act'' is defined by 18 U.S.C. 201(a)(3) as ``any decision or action on

any question, matter, cause, suit, proceeding or controversy, which may

at any time be pending, or which may by law be brought before any

public official, in such official's official capacity, or in such

official's place of trust or profit.'' Hence, as a matter of law, Mr.

Patel's conviction establishes that his action was intended to

influence official action. The public official to whom the illegal

gratuity was given was a Branch Chief of one of the four chemistry

review branches within FDA's Division of Generic Drugs, whose sole

responsibilities were the review of applications submitted by generic

drug manufacturers seeking FDA's approval to market their products to

the public, and the general regulation of generic drugs. Therefore, Mr.

Patel's conviction under 18 U.S.C. 201(c)(1)(A) is alone sufficient to

establish that his felony conviction was for conduct relating to the

development and approval, including the process for development and

approval, of a drug product, and for conduct relating to the regulation

of a drug product.

 

Mr. Patel argues that the judge who sentenced him did not view the

payments as affecting the development, approval, or regulation of a

drug product. He supports this argument with the judge's statements,

``It's not the question of improper handling * * *,'' and ``There is no

evidence that they did any favor * * *,'' (see sentencing transcript,

pp. 7 and 17). However, the judge does not imply that the gratuities

were unrelated to the development, approval, or regulation of a drug

product. To the contrary, he compares the gratuities to insurance when

he states, ``* * * like insurance you got somebody who favors you as

opposed to somebody who is against you, get somebody friendly towards

you so when you do get the application[s] they don't hide them * * *''

(see sentencing transcript, p. 6). While there is no evidence of a

direct benefit to Mr. Patel, the fact that he paid the gratuities for

``insurance'' of his drug applications is sufficient to relate to the

development, approval, and regulation of a drug product.

 

Finally, Mr. Patel had ample opportunity to contest the

Government's allegations during the criminal case prior to his

conviction. Thus, Mr. Patel is collaterally estopped from arguing that

he did not provide the gratuity ``for or because of any official act

performed or to be performed.''

 

B. Retroactive Application of the Act

    

Mr. Patel argues in his letter requesting a hearing that the

debarment provisions are not retroactive, and therefore, because his

crime predated the act, it does not fall under the act.

 

Mr. Patel's argument that section 306(a)(2) of the act should not

be applied retroactively is unpersuasive. A commonly used rule of

statutory construction states that where Congress includes particular

language in one section of a statute but omits it in another section of

the same act, it is generally presumed that Congress acts intentionally

and purposely in the disparate inclusion or exclusion. (I. N. S. v.

Cardoza-Fonseca, 107 S.Ct. 1207, 1213 (1987), citing Russelo v. United

States, 104 S.Ct. 296, 300 (1983).) Under this rule of statutory

construction, section 306(a)(2) of the act is clearly retroactive.

Section 306(a) of the act treats mandatory debarment of business

entities differently from mandatory debarment of individuals with

respect to retroactivity. Mandatory debarment of business entities

under section 306(a)(1) of the act is not retroactive because it only

applies to convictions ``after the date of enactment of this section.''

However, section 306(a)(2) of the act, which pertains to mandatory

debarment of individuals, does not contain this limiting language.

Therefore, if Congress had intended for section 306(a)(2) of the act

not to be retroactive, it would have included the language ``after the

date of enactment of this section.'' The limitation does not apply

where it was excluded.

 

Another appropriate application of this rule of statutory

construction is with regard to section 306(l)(2) of the act, which sets

out the effective dates for each provision of the act. Section

306(l)(2) of the act also indicates that section 306(a)(2) is

retroactive. The only limitation section 306(l)(2) sets on section

306(a) of the act is that section 306(a) shall not apply to a

conviction that occurred more than 5 years before the initiation of an

agency action. This language indicates that any applicable conviction

may be used as the basis for debarment, so long as it occurred no more

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

other provisions covered in section 306(l) of the act are further

limited by the statement that the section shall not apply to an action

that occurred before June 1, 1992. Thus, when Congress intended that a

certain section not be retroactive, it set a specific effective date or

used specific limiting language as in section 306(a)(1) of the act.

Congress' intentional omission of an effective date for section

306(a)(2) of the act indicates its intent that this section be

retroactive.

 

Finally, because section 306(a)(2) of the act does not explicitly

address the retroactivity issue, FDA's interpretation must be based on

a permissible construction of the act. A permissible construction is

one that is reasonable and consistent with the purpose of the statute.

(See Chevron v. N. R. D. C., 104 S. Ct. 2778 (1984), and Schering Corp.

v. Sullivan (782 F. Suppl. 645 (1992).) The purpose of the Generic Drug

Enforcement Act of 1992 (GDEA) is ``to restore and ensure the integrity

of the ANDA approval process and to protect the public health.'' (See

section 1, Pub. L. 102-282, The Generic Drug Enforcement Act of 1992.)

FDA's interpretation is consistent with this purpose. The GDEA was

passed in response to the widespread fraud and corruption revealed by

the generic drug investigations that began in the late 1980's. (See

House Committee Report, October 24, 1991, at p. 11.) Congress clearly

enacted the GDEA in order to take action against the wrongdoers of the

1980's, as well as current wrongdoers. FDA's interpretation that

section 306(a)(2) of the act is retroactive is reasonable in that it is

consistent with the purpose of the GDEA, which is to remedy past fraud

and corruption.

 

C. The Ex Post Facto Clause

    

Mr. Patel also argues 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. Patel's

criminal conduct, and it changes the legal consequences of his

violation of the law. On May 13, 1992, Congress amended the Federal

Food, Drug, and Cosmetic Act to include section 306(a)(2), Mr. Patel

was convicted on October 18, 1989.

 

An ex post facto law is one that reaches back to punish acts that

occurred before enactment of the law or that 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).)

 

Mr. Patel's claim that application of the mandatory debarment

provisions of the act is prohibited by the ex post facto clause is

unpersuasive. Because the intent behind debarment under section

306(a)(2) of the act is remedial rather than punitive, this section

does not violate the ex post facto clause.

 

The congressional intent with respect to actions under section

306(a)(2) of the act is clearly remedial. Congress created the 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 set forth

in the GDEA is ``to restore and ensure the integrity of the ANDA

approval process and to protect the public health.'' (See section 1,

Pub. L. 102-282, The Generic Drug Enforcement Act of 1992.) This is a

remedial rather than punitive goal. (See Manocchio v. Kusserow, 961

F.2d 1539, 1542 (11th Cir. 1992) (exclusion of physician from

participation in medicare programs because of criminal conviction is

remedial, not punitive).) Supporting the remedial character of

debarment is a statement by Senator Hatch in the Congressional Record

of April 10, 1992, at S 5616, ``* * * [t]he legislation * * * provides

a much-needed remedy for the blatant fraud and corruption uncovered in

the generic drug industry * * * during the last 3 years.''

 

The Supreme Court has long held that statutes that deny future

privileges to convicted offenders because of their previous criminal

activities in order to ensure against corruption in specified areas do

not impose penalties for past conduct and, therefore, do not violate

the ex post facto prohibitions. (See e.g., Hawker v. New York, 170 U.S.

189, 190 (1898) (physician barred from practicing medicine for a prior

felony conviction); DeVeau v. Braisted, 373 U.S. 154 (1960) (convicted

felon's exclusion from employment as officer of waterfront union is not

a violation of the ex post facto clause).)

 

In DeVeau, the court upheld a law that prohibited a convicted felon

from employment as an officer in a waterfront union. The purpose of the

law was to remedy the past corruption and to ensure against future

corruption in the waterfront unions. The court in DeVeau, 363 U.S. at

160, stated:

    

The question in each case where unpleasant consequences are

brought to bear upon an individual for prior conduct, is whether the

legislative aim was to punish that individual for past activity, or

whether the restriction of the individual comes about as a relevant

incident to a regulation of a present situation, such as the proper

qualifications for a profession * * *.

    

As in DeVeau, the legislative purpose of the relevant statute is to

ensure that fraud and corruption are eliminated from the drug industry.

The restrictions placed on individuals convicted of a felony under

Federal law are not intended as punishment but are ``incident to a

regulation of a present situation'' (DeVeau, 363 U.S. at 160) and

necessary in order to remedy the past fraud and corruption in the

industry.

 

C. The Double Jeopardy Clause

    

In his final argument, Mr. Patel claims that the proposal to debar

him under section 306(a)(2) of the act violates the double jeopardy

clause of the Fifth Amendment to the U.S. Constitution. The double

jeopardy clause states that no person shall ``be subject for the same

offense to be twice put in jeopardy of life or limb.'' Mr. Patel relies

on U.S. v. Halper, 490 U.S. 435 (1989), to argue that the Fifth

Amendment double jeopardy clause should prevent his debarment because

``jeopardy'' can attach even in a purely civil proceeding, so long as

the civil sanction is punitive, not remedial. He further argues that

his proposed permanent debarment is punitive because it would eliminate

any opportunity to demonstrate that he would no longer be a threat to

the integrity of the drug approval process.

 

Mr. Patel's argument is unpersuasive. First, ``jeopardy'' cannot

attach because the effect of section 306(a)(2) of the act is remedial,

not punitive. As discussed above, the legislative goal of this section

is to restore and ensure the integrity of the drug approval process and

to protect the public health by eradicating fraud and corruption from

the drug industry. This is plainly a remedial rather than a punitive

goal. (Manocchio v. Kusserow, 961 F.2d at 1542.)

 

The fact that Mr. Patel's debarment is permanent rather than

temporary does not signify that the legislation is nonremedial or

punitive. The Supreme Court has upheld laws which, for remedial

purposes, permanently bar a class or group of individuals from certain

occupations due to a prior criminal conviction. (See Hawker v. New

York, 170 U.S. 189, 190 (1898); DeVeau v. Braisted, 373 U.S. 154

(1960).)

 

Second, the double jeopardy clause is inapplicable to FDA's

proposal to debar Mr. Patel because the sanctions imposed by section

306(a)(2) of the act are rationally related to the remedial

governmental goal of eradicating fraud from the drug industry.

 

Due to the potentially serious consequences to the public health of

fraud and corruption in the drug industry, the permanent debarment of

convicted felons like Mr. Patel is not an excessive means to eliminate

fraud from the industry. The legislative history of the GDEA is replete

with statements, some cited above, that the act provides a reasonable

means of ridding the generic drug industry of widespread corruption and

restoring consumer confidence in generic drugs.

 

Mr. Patel acknowledges that he was convicted as alleged by FDA in

its proposal to debar him and has raised no genuine and substantial

issue of fact regarding this conviction. While Mr. Patel's legal

arguments do not create a basis for a hearing, FDA has considered these

arguments before taking final action and has found them unpersuasive.

Accordingly, the Interim Deputy Commissioner for Operations denies Mr.

Patel's request for a hearing.

 

III. Findings and Order

    

Therefore, the Interim Deputy Commissioner for Operations, under

section 306(a) of the act, and under authority delegated to her (21 CFR

5.20), finds that Mr. Ashok Patel 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 a drug product

(21 U.S.C. 335a(a)(2)(A)); and (2) relating to the regulation of a drug

product (21 U.S.C. 335a(a)(2)(B)).

 

As a result of the foregoing findings, Mr. Ashok Patel is

permanently debarred from providing services in any capacity to a

person with an approved or pending drug product application under

section 505, 507, 512, or 802 of the act (21 U.S.C. 355, 357, 360b, or

382), or under section 351 of the Public Health Service Act (42 U.S.C.

262), effective November 8, 1994 (21 U.S.C. 335a(c)(1)(B) and

(c)(2)(A)(ii) and 21 U.S.C. 321(ee)).

 

Any person with an approved or pending drug product application who

knowingly uses the services of Mr. Patel in any capacity, during his

period of debarment, will be subject to civil money penalties (21

U.S.C. 335b(a)(6)). If Mr. Patel, during his period of debarment,

provides services in any capacity to a person with an approved or

pending drug product application, he will be subject to civil money

penalties (21 U.S.C. 335b(a)(7)). In addition, FDA will not accept or

review any abbreviated new drug application or abbreviated antibiotic

drug application submitted by or with Mr. Patel's assistance during his

period of debarment.

 

Mr. Patel may file an application to attempt to terminate his

debarment, pursuant to section 306(d)(4)(A) of the act. Any such

application would be reviewed under the criteria and processes set

forth in section 306(d)(4)(C) and (d)(4)(D) of the act. Such an

application should be identified with Docket No. 92N-0417 and sent to

the Dockets Management Branch (address above). All such submissions are

to be filed in four copies. The public availability of information in

these submissions is governed by 21 CFR 10.20(j). Publicly available

submissions may be seen in the Dockets Management Branch between 9 a.m.

and 4 p.m., Monday through Friday.

    

Dated: October 28, 1994.

Linda A. Suydam,

Interim Deputy Commissioner for Operations.

[FR Doc. 94-27668 Filed 11-7-94; 8:45 am]

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