Inspections, Compliance, Enforcement, and Criminal Investigations

11/08/1994

[Federal Register: November 8, 1994]


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.


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:

  1. Background
  2. 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)).

  3. Mr. Patel's Arguments in Support of a Hearing
    1. Mr. Patel's Conduct
    2. 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.''

    3. 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.

    4. 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.

    5. 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.

  4. 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]

BILLING CODE 4160-01-F

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