Inspections, Compliance, Enforcement, and Criminal Investigations
[Federal Register: June 25, 1998 (Volume 63, Number 122)]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
[Docket No. 92N-0429]
Constantine I. Kostas; Denial of Hearing; Final Debarment Order
AGENCY: Food and Drug Administration, HHS.
SUMMARY: The Food and Drug Administration (FDA) denies a request for a
hearing and issues a final order under the Federal Food, Drug, and
Cosmetic Act (the act) permanently debarring Constantine I. Kostas,
Nine Cedar Mill Rd., Lynnfield, MA 01940, from providing services in
any capacity to a person that has an approved or pending drug product
application. FDA bases this order on its finding that Dr. Kostas was
convicted of felonies under Federal law for conduct relating to the
development or approval, including the process for development or
approval, of a drug product, and conduct relating to
the regulation of a drug product under the act.
EFFECTIVE DATE: June 25, 1998.
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: Leanne Cusumano, Center for Drug
Evaluation and Research (HFD-7), Food and Drug Administration, 5600
Fishers Lane, Rockville, MD 20857, 301-594-2041.
Constantine I. Kostas, a former clinical investigator retained by a
pharmaceutical drug manufacturer to conduct two investigational drug
studies, pled guilty and was sentenced on October 13, 1988, to one
count of mail fraud and one count of making false statements to a
governmental agency. These are Federal felony offenses under 18 U.S.C.
1341 and 1001, respectively. These convictions were based upon Dr.
Kostas' submission of fabricated patient case report forms to the
sponsor of investigational drug studies from whom Dr. Kostas received,
via the U.S. Postal Service, payments for conducting the clinical
On December 14, 1992, Dr. Kostas received a certified letter from
FDA offering Dr. Kostas an opportunity for a hearing on the agency's
proposal to issue an order under the Generic Drug Enforcement Act
(GDEA), section 306(a)(2) of the act (21 U.S.C. 335a(a)(2)). Under
section 306(a)(2) of the act, an individual who has been 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, or conduct relating to the regulation of a drug product, shall
be debarred from providing services in any capacity to a person that
has an approved or pending drug product application. FDA found that Dr.
Kostas was subject to debarment under section 306(a)(2) of the act
because he had been convicted of Federal felony offenses for conduct
related to drug product development, approval, and regulation.
The certified letter informed Dr. Kostas 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 certified letter further
notified Dr. Kostas that if it conclusively appeared from the face of
the information and factual analysis in his request for a hearing that
there was no genuine and substantial issue of fact that precluded the
order of debarment, FDA would enter summary judgment against him and
deny his request for a hearing in accordance with procedures set forth
at part 12 (21 CFR part 12).
Dr. Kostas requested a hearing in a letter dated February 12, 1993,
based upon three grounds. His request, in its entirety, states:
Dr. Kostas, by his attorney, requests a hearing on the following
(1) The law, as applied to Dr. Kostas, violates the expost facto
clause of the Constitution of the United States. Art. I, Sec. 9, cl.
3 of the Constitution. Debarment is, in effect, a criminal
forfeiture and an increased punishment which could not have been
imposed at the time of Dr. Kostas' conviction.
In addition, Dr. Kostas' offer of plea of guilty to the criminal
charges was tendered and accepted with no mention of P.L. 102-282
(2) The pleas of guilty which prompted your letter of December
9, 1992, were based upon conduct last occurring in 1985. The conduct
was not discovered by the government, but was reported voluntarily
by Dr. Kostas. In addition, Dr. Kostas immediately, that is in 1985,
returned all funds to [the pharmaceutical company]. The pleas of
guilty did not result in any incarceration and Dr. Kostas did not
lose his license to practice. Since in excess of seven years has
passed, application of 21 U.S.C. Sec. 335a would be violative of
both the ex post facto and due process clauses of the Constitution.
(3) Dr. Kostas hereby incorporates all of the reasons in the
preceding paragraph and states additionally that precepts of
constitutional law require statutes such as 21 U.S.C. Sec. 335a to
be applied prospectively and with the rule of lenity.
For all of the foregoing reasons, pursuant to 21 C.F.R.
Sec. 12.22, Dr. Kostas requests a hearing on the above issues.
Undersigned contemplates that briefing of issues and argument may be
necessary, insofar as the facts are not in dispute.
Although Dr. Kostas concedes that he was convicted of felonies
under Federal law and that no facts are in dispute, he argues that
FDA's proposal to debar him is unconstitutional. The Deputy
Commissioner for Operations has considered Dr. Kostas' claims and, for
the reasons discussed below, concludes that they are unpersuasive and
fail to raise a genuine and substantial issue of fact requiring a
II. Dr. Kostas' Claims in Support of His Hearing Request
A. The Ex Post Facto Argument
In his hearing request, Dr. Kostas argues that the ex post facto
clause of the U.S. Constitution prohibits FDA from retrospectively
applying section 306(a)(2) of the act to him. He states that
``debarment is, in effect, a criminal forfeiture and an increased
punishment which could not have been imposed at the time of Dr. Kostas'
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, 497 U.S.
Dr. Kostas' argument that application of the mandatory debarment
provisions of the act is prohibited by the ex post facto clause is
unpersuasive, because the intent of debarment is remedial, not
punitive. Congress created the GDEA in response to findings of fraud
and corruption in the generic drug industry. Both the language of the
GDEA 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 abbreviated new drug application approval process
and to protect the public health.'' (See section 1, Pub. L. 102-282,
GDEA of 1992.) In a suit challenging a debarment order issued by FDA
(58 FR 69368, December 30, 1993), the constitutionality of the
debarment provision was upheld against a challenge under the ex post
facto clause. The reviewing court affirmed the remedial character of
Without question, the GDEA serves compelling governmental
interests unrelated to punishment. The punitive effects of the GDEA
are merely incidental to its overriding purpose to safeguard the
integrity of the generic drug industry while protecting public
(Bae v. Shalala, 44 F.3d 489, 493 (7th Cir. 1995); see also DiCola v.
Food and Drug Administration, 77 F.3d 504 (D.C. Cir. 1996).) Because
the intent of the GDEA is remedial rather than punitive, Dr. Kostas'
argument that the GDEA violates the ex post facto clause must fail.
(See Bae v. Shalala, 44 F.3d at 496-497.)
Dr. Kostas also states that his ``offer of plea of guilty to the
criminal charges was tendered and accepted with no mention or
contemplation of [debarment].'' It is not the function of the plea
agreement to provide notice of any subsequent civil or administrative
actions. Nor do the terms of the plea agreement preclude subsequent
civil or administrative actions against Dr. Kostas. Therefore, Dr.
Kostas' claim that the plea agreement does not mention debarment fails
to raise a genuine and substantial issue of fact.
B. The Due Process Argument
Dr. Kostas argues that, because his debarment is based upon conduct
occurring over 7 years before the agency proposed to debar him, and
because of other mitigating factors, his debarment also violates the
due process clause (presumably the fifth amendment) of the U.S.
Constitution. Under the fifth amendment, no person shall be deprived of
life, liberty, or property without due process of law. Dr. Kostas' due
process claim appears grounded upon an alleged retroactive deprivation
of future employment.
The Supreme Court has said that retroactive legislation must be
supported by ``a legitimate legislative purpose furthered by rational
means.'' (Pension Benefit Guar. Corp. v. R. A. Gray & Co., 467 U.S.
717, 729 (1984).) The ``judgments about the wisdom of such legislation
remain within the exclusive province of the legislative and executive
branches.'' Id. As discussed above, Congress intended the GDEA to be
remedial. The GDEA prohibits certain individuals from providing
services to a person who has an approved or pending drug application in
order to meet the legitimate regulatory purpose of restoring the
integrity of the drug approval and regulatory process and protecting
the public health. In addition, the remedial nature of the GDEA is not
diminished simply because the GDEA deters debarred individuals from
future misconduct. (U.S. v. Halper, 109 S.Ct. 1892, 1901, n.7 (1989);
Bae v. Shalala, 44 F.3d 489, 493 (7th Cir. 1995).)
Dr. Kostas argues that because he was not incarcerated and did not
lose his ``license to practice,'' and because he voluntarily reported
his conduct and provided restitution to the pharmaceutical company,
debarment under the GDEA would violate the due process clauses of the
Constitution. This list of mitigating circumstances suggests a
``takings'' argument based upon an expectation of future employment.
However, the expectation of employment is not recognized as a protected
property interest under the fifth amendment. (Hoopa Valley Tribe v.
Christie, 812 F.2d 1097, 1102 (9th Cir. 1986); Chang v. United States,
859 F.2d 893, 896-897 (Fed. Cir. 1988).) One who voluntarily enters a
pervasively regulated industry, such as the pharmaceutical industry,
and then violates its regulations, cannot successfully claim that he
has a protected property interest when he is no longer entitled to the
benefits of that industry. (Erikson v. United States, 67 F.3d 858 (9th
Cir. 1995).) Thus, debarment for a 1985 felony conviction does not
violate the ex post facto or due process clauses of the Constitution.
In addition, Dr. Kostas' list of mitigating circumstances does not
raise a genuine or substantial issue of disputed fact.
C. Prospective Application and the Rule of Lenity Arguments
Finally, Dr. Kostas argues that constitutional law requires that
the GDEA be applied ``prospectively'' and with ``the rule of lenity.''
Again Dr. Kostas' arguments are unpersuasive. The GDEA, as remedial
legislation, was intended by Congress to be applied, in part, to
conduct that occurred before enactment of the legislation. The express
language of section 306(a)(1) of the act requires that mandatory
debarment apply only prospectively to a person ``other than an
individual'' who has been convicted of a Federal felony offense ``after
the date of enactment of this section [section 306(a)(1)].'' By
contrast, section 306(a)(2) of the act, which applies only to
individuals, omits the limiting language regarding prospective
application, indicating a legislative intent to apply this provision
retrospectively. When one of two closely related subsections within the
same act contains particular language that is omitted from the other
subsection, ``it is generally presumed that Congress acted
intentionally and purposely in the disparate inclusion or exclusion.''
(Russello v. U.S., 464 U.S. 16, 24 (1983) (citations omitted); USA v.
Olin Corp., 107 F.3d 1506, 1513 (11th Cir. 1997).) Such retrospective
remedial legislation is not unlawful so long as the ``retroactive
application of the legislation is itself justified by a rational
legislative purpose.'' (Pension Benefit Guar. Corp. v. R. A. Gray &
Co., 467 U.S. at 730.) As discussed previously, debarment under the
GDEA meets the legitimate regulatory purpose of restoring the integrity
of the drug review process and protecting the public health.
Dr. Kostas also states that constitutional law requires that the
``rule of lenity'' apply to his case. The rule of lenity applies in
criminal cases and requires a sentencing court to impose the lesser of
two penalties where there is an actual ambiguity over which penalty
should apply. (U.S. v. Canales, 91 F.3d 363 (2nd Cir. 1996).) The rule
of lenity is not applicable here because debarment under the GDEA is
neither a criminal law nor a penalty. It is a civil, remedial law
intended to protect the drug review process and the public health.
Moreover, section 306(a)(2) of the act requires debarment in this case
and does not provide the agency with discretion to implement a
None of Dr. Kostas' arguments raises a genuine and substantial
issue of fact regarding his conviction. Instead, Dr. Kostas concedes
that there are no facts in dispute. Moreover, Dr. Kostas'
constitutional arguments are without merit. Accordingly, the Deputy
Commissioner for Operations denies Dr. Kostas' request for a hearing
under 21 CFR 12.28.
III. Findings and Order
Therefore, the Deputy Commissioner for Operations, under section
306(a) of the act and under authority delegated to him (21 CFR 5.20),
finds that Dr. Constantine I. Kostas has been convicted of felonies
under Federal law for conduct: (1) Relating to the development or
approval, including the process for development or approval, of a drug
product (section 306(a)(2)(A) of the act); and (2) relating to the
regulation of a drug product (306(a)(2)(B)) of the act)).
As a result of the foregoing findings, Dr. Kostas is permanently
debarred from providing services in any capacity to a person with an
approved or pending drug product application under sections 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
June 25, 1998 (sections 306(c)(1)(B) and (c)(2)(A)(ii) and 201(dd) of
the act (21 U.S.C. 321(dd))). Any person with an approved or pending
drug product application who knowingly uses the services of Dr. Kostas
in any capacity, during his period of debarment, will be subject to
civil money penalties (section 307(a)(6) of the act (21 U.S.C.
335b(a)(6))). If Dr. Kostas, 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
(section 307(a)(7) of the act). In addition, FDA will not accept or
review any abbreviated new drug application or abbreviated antibiotic
drug application submitted by Dr. Kostas or with his assistance during
his period of debarment (section 306(c)(1)(B) of the act).
Dr. Kostas may file an application to attempt to terminate his
debarment under section 306(d)(4)(A) of the act. Any such application,
if filed, will be reviewed under the criteria and processes set forth
in section 306(d)(4)(C) and (D) of the act. Any such application should
be identified with Docket No. 92N-0429 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
may be seen in the Dockets Management Branch between 9 a.m. and 4 p.m.,
Monday through Friday.
Dated: June 18, 1998.
Michael A. Friedman,
Acting Commissioner of Food and Drugs.
[FR Doc. 98-16850 Filed 6-24-98; 8:45 am]
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