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U.S. Department of Health and Human Services

Inspections, Compliance, Enforcement, and Criminal Investigations

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FR DATE:12/02/2004

[Federal Register: December 2, 2004 (Volume 69, Number 231)]

[Notices]               
[Page 70148-70153]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02de04-70]                         

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. 2002N-0291]

 
Baldev Raj Bhutani; Denial of Hearing; Final Debarment Order

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is denying Baldev Raj 
Bhutani's request for a hearing and is issuing a final order under the 
Federal Food, Drug, and Cosmetic Act (the act) permanently debarring 
Baldev Raj Bhutani 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. Bhutani was convicted of a felony 
under Federal law for conduct related to the regulation of a drug 
product under the act. Mr. Bhutani has failed to file with the agency 
information and analyses sufficient to create a basis for a hearing 
concerning this action.

DATES: This order is effective December 2, 2004.

ADDRESSES: Submit applications for termination of debarment to the 
Division of Dockets Management (HFA-305), Food and Drug Administration, 
5630 Fishers Lane, rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: S. Mitchell Weitzman, Center for Drug 
Evaluation and Research (HFD-7), Food and Drug Administration, 5600 
Fishers Lane, Rockville, MD 20857, 301-594-2041.

SUPPLEMENTARY INFORMATION:

I. Background

    On February 12, 1996, Mr. Bhutani, former President and Treasurer 
of Alra Laboratories, Inc. (Alra), was found

[[Page 70149]]

guilty of one count of conspiracy, a Federal felony offense under 18 
U.S.C. 371, and six other counts, also Federal felonies, related to 
violations under sections 301(a), (e), and (k) and 303 of the act (21 
U.S.C. 331(a), (e), and (k) and 333(a)(2)). A new trial was ordered by 
the U.S. District Court for the Northern District of Illinois-Eastern 
Division on December 17, 1997. On April 28, 1999, the U.S. Court of 
Appeals for the Seventh Circuit reversed the District Court's ruling 
that Mr. Bhutani was entitled to a new trial and reinstated his 
convictions. On October 12, 1999, Mr. Bhutani pled guilty to one count 
of wire fraud, a Federal felony under 18 U.S.C. 1343. On February 15, 
2000, Mr. Bhutani was adjudged guilty of all of these offenses and 
sentenced by the U.S. District Court for the Northern District of 
Illinois-Eastern Division. The U.S. Court of Appeals for the Seventh 
Circuit affirmed the District Court's denial of a motion for a new 
trial on September 12, 2001.
    The basis for these convictions were Mr. Bhutani's violations of 
various sections of the act involving the drug products LACTULOSE Syrup 
and K+10 (potassium chloride extended-release tablets). Specifically, 
Mr. Bhutani, the President and Treasurer of Alra, was convicted of the 
following:
     Conspiracy (in violation of 18 U.S.C. 371) to commit the 
following offenses against the United States: (1) Manufacturing and 
introducing adulterated and misbranded generic drug products into 
interstate commerce (in violation of 21 U.S.C. 331(a)); (2) failing to 
establish and maintain records as required under the act (in violation 
of 21 U.S.C. 331(e)); (3) making false statements to FDA (in violation 
of 18 U.S.C. 1001); (4) obstructing the administration of law in 
proceedings pending before FDA (in violation of 18 U.S.C. 1505); and 
(5) obstructing proceedings before a Federal grand jury (in violation 
of 18 U.S.C. 1503).
     Adulterating the drug product LACTULOSE Syrup, United 
States Pharmacopeia (USP), lot 52-230-P, in violation of 21 U.S.C. 
331(k), by including decomposed LACTULOSE raw material in the finished 
drug product, and by deviating from the approved manufacturing 
procedures by adding an undocumented substance, sodium hydroxide, to 
this drug product in an unapproved manner.
     Failing to establish and maintain records as required 
under the act (in violation of 21 U.S.C. 331(e)), specifically failing 
to establish and maintain accurate drug manufacturing batch production 
records for the drug product LACTULOSE Syrup, USP, lot 52-230-P, in 
that he failed to document the unauthorized addition of sodium 
hydroxide more than 2 years after the original manufacture of this lot.
     Introducing into interstate commerce, in violation of 21 
U.S.C. 331(a), the drug product LACTULOSE Syrup, USP, lot 52-230-P, 
which (1) was not manufactured in accordance with current good 
manufacturing practice regulations and (2) contained an undocumented 
substance, sodium hydroxide.
     Adulterating the drug product LACTULOSE Syrup, USP, lot 
92-558-P, by violating current good manufacturing practice regulations 
and by preparing and holding the drug product under unsanitary 
conditions whereby it may have been contaminated with filth (21 U.S.C. 
331(k)). Specifically, Mr. Bhutani received the drug product's active 
raw material, LACTULOSE concentrate, in punctured drums and then 
directed Alra employees to inject hot glue into the punctures to plug 
the leaks, and to wrap self-adhesive duct tape over the punctures, and 
thereafter used this contaminated raw material in the manufacture of a 
finished drug product.
     Introducing into interstate commerce the drug product 
LACTULOSE, lot 92-558-P, which was adulterated in that it was not 
manufactured in accordance with current good manufacturing practice 
regulations, and it was prepared and held under unsanitary conditions 
whereby it may have been contaminated with filth, in violation of 21 
U.S.C. 331(a). Alra then used this contaminated raw material in the 
manufacture of a finished drug product and shipped it in interstate 
commerce to customers.
     Adulterating the drug product K+10 by violating current 
good manufacturing practice regulations under 21 U.S.C. 331(k), by 
contaminating this drug product with metal shavings from a stainless 
steel pipe, and by preparing and holding the drug product under 
unsanitary conditions whereby it may have been contaminated with filth 
and rendered injurious to health. Specifically, Mr. Bhutani directed 
employees to make tablets from the drug product when he knew the 
granulation powder contained metal fragments from a stainless steel 
pipe.
    As a result of Mr. Bhutani's convictions and because he was 
convicted of felonies that were clearly related to the regulation of a 
drug product under the act, FDA served him by certified letter on 
February 6, 2003, a proposal to permanently debar him from providing 
services in any capacity to a person that has an approved or pending 
drug product application. The proposal also offered Mr. Bhutani an 
opportunity for a hearing on the proposal. FDA based the debarment 
proposal on a finding that Mr. Bhutani was convicted of a felony under 
Federal law for conduct relating to the regulation of Alra's drug 
products.
    The certified letter informed Mr. Bhutani 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 informed Mr. Bhutani 
that the only material issue of fact was whether he was convicted as 
alleged in the letter. Finally, the letter informed Mr. Bhutani 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 that precluded the order of debarment, FDA 
would enter summary judgment against him and deny his request for a 
hearing.
    In a letter dated January 30, 2003, \1\ Mr. Bhutani requested a 
hearing on the proposal and attached supporting materials. In his 
request for a hearing, Mr. Bhutani acknowledges his convictions under 
Federal law as alleged by FDA. However, he disputes many of the facts 
and judicial decisions that formed the basis for his convictions.
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    \1\ Mr. Bhutani's response pre-dated his actual receipt of the 
certified letter. This was because service was initially attempted 
at his home instead of at the prison at which he was incarcerated. 
We presume that Mr. Bhutani was informed of this attempted service 
and preemptively submitted his request for a hearing. A second 
attempt at service at the prison facility at which he is 
incarcerated was successful. In any event, the delivery dates do not 
alter the nature of Mr. Bhutani's request for a hearing or our 
application of summary judgment in this matter.
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    We reviewed these materials, as well as supplementary submissions 
from Mr. Bhutani dated February 25, 2003, March 17, 2003, February 17, 
2004, and November 12, 2004, and find that they do not create a basis 
for a hearing because hearings will be granted only if there is a 
genuine and substantial issue of fact. Hearings will be granted neither 
on issues of policy or law or on mere allegations, denials, or general 
descriptions of positions and contentions, nor on data and information 
insufficient to justify the factual determination urged. (See 21 CFR 
12.24(b).)
    The Associate Commissioner for Regulatory Affairs has considered 
Mr. Bhutani's arguments and concludes that they are unpersuasive and 
fail to raise

[[Page 70150]]

a genuine and substantial issue of fact requiring a hearing.

II. Legal Arguments Raised by Mr. Bhutani

    Mr. Bhutani raised a number of legal arguments in support of his 
hearing request. These legal arguments are not relevant to the decision 
to grant a hearing because Mr. Bhutani has not raised a genuine and 
substantial issue of fact. A hearing will not be granted on issues of 
law. See 21 CFR 12.24(b)(1). Mr. Bhutani's legal arguments are 
discussed in the following paragraphs.

A. Materiality as an Element of ``Intent to Defraud''

    Mr. Bhutani contends that ``materiality'' as an element of ``intent 
to defraud'' was erroneously not given as a jury instruction, citing 
U.S. v. Neder, 527 U.S. 1 (1999). Neder held that when Congress used 
the term ``to defraud'' in the mail and wire fraud statutes, Congress 
incorporated the common law requirement of materiality as an element of 
the offense.
    Mr. Bhutani maintains that the violations cited by the proposal to 
debar are not material and that there is no evidence that the acts 
underlying the violations affected the quality, strength, purity, or 
potency of the drug products under his control.
    The act requires FDA to mandatorily debar an individual who has 
been convicted of certain Federal felonies. Thus, the only relevant 
factual issue here is whether Mr. Bhutani was, in fact, convicted of a 
Federal felony for conduct related to the regulation of a drug product, 
and not whether the acts underlying the violations are material. 
Accordingly, Mr. Bhutani's argument is without merit.

B. Ex Post Facto

    Mr. Bhutani maintains that in 1988, section 301(e) of the act did 
not specifically require batch documentation, as it does now, and 
therefore ex post facto principles apply. 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, 337, 18L. Ed 366 
(1866); Collins v. Youngblood, 497 U.S. 37 (1990).
    Mr. Bhutani's assertion regarding section 301(e) relates to the 
facts and findings underlying his conviction. These facts and findings 
are not relevant to this debarment proceeding. As stated previously in 
this document, the only relevant consideration under section 306(a)(2) 
of the act (21 U.S.C. 335a(a)(2)) is whether Mr. Bhutani was convicted 
of a felony under Federal law for conduct related to the regulation of 
a drug product under the act. Therefore, Mr. Bhutani's argument 
regarding section 301(e) and the Ex Post Facto Clause in connection 
with this debarment proceeding is without merit.
    Mr. Bhutani also suggests that, in general, the Ex Post Facto 
Clause of the U.S. Constitution prohibits application of section 
306(a)(2) of the act (21 U.S.C. 335a(a)(2)) to him because this section 
was not in effect at the time of Mr. Bhutani's criminal conduct.
    With the enactment of the Generic Drug Enforcement Act (GDEA) on 
May 13, 1992, Congress amended the act to include section 306(a)(2) of 
the act. Mr. Bhutani's implication 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 [abbreviated new drug application] 
approval process and to protect the public health.'' (See section 1, 
Public Law 102-282, the Generic Drug Enforcement Act of 1992.) This is 
a remedial rather than punitive goal. In Bae v. Shalala, 44 F. 3d 489 
(7th Cir. 1995), the Seventh Circuit upheld FDA's debarment under the 
GDEA of the former president of a generic drug manufacturing firm, 
based on his antecedent conviction for providing an ``unlawful 
gratuity'' to an FDA official. Although Bae argued that his debarment 
was ``retroactive punishment'' in violation of the Ex Post Facto Clause 
of the U.S. Constitution, the Seventh Circuit found that Bae's 
debarment was remedial, not punitive, and therefore did not violate the 
Ex Post Facto Clause. (Bae, 44 F. 3d at 493, 495-96). The Seventh 
Circuit recognized that, to achieve its remedial goal of restoring 
consumer confidence in the generic drug industry, Congress 
appropriately determined that it could prohibit felons such as Bae from 
future activity in the industry. (Id. at 496.) (See also DiCola v. FDA, 
77 F. 3d 504 (D.C. Cir. 1996 (debarment of a convicted felon did not 
violate Ex Post Facto Clause); 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 and therefore did not violate the Ex Post Facto Clause).)
    The Supreme Court has long held that statutes that deny future 
privileges to convicted offenders because of their previous criminal 
activities to insure 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); De Veau v. Braisted, 363 U.S. 144 (1960) (convicted 
felon's exclusion from employment as officer of waterfront union is not 
a violation of the Ex Post Facto Clause).) In De Veau, 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 insure against future corruption in the waterfront 
unions. The court in De Veau, 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 De Veau, the legislative purpose of section 306(a)(2) of the 
act 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'' (De Veau, 363 U.S. at 160) and 
are necessary to remedy the past fraud and corruption in the industry. 
Because the intent of the GDEA is remedial rather than punitive, Mr. 
Bhutani's argument that the GDEA violates the Ex Post Facto Clause must 
fail.

C. Scope of Debarment Authority

    Mr. Bhutani asserts that the proposal to debar him and the 
debarment provisions themselves (section 306(a)(2)(B) of the act) are 
too broad and not specific, so he is entitled to a hearing. This 
argument is without merit.
    Neither the proposal to debar nor the act's debarment provisions, 
on which the proposal to debar was based, are broad or unspecific. The 
debarment proposal set forth expressly the conduct on which the 
proposal is based, the findings of FDA, the agency's proposed

[[Page 70151]]

action, and the procedure for requesting a hearing. Section 
306(a)(2)(B) of the act clearly mandates the debarment of an individual 
who has been convicted of a Federal felony for conduct relating to the 
regulation of any drug product. The act defines the conduct and felony 
conviction that lead to debarment. The period of debarment is also in 
section 306(c)(2) of the act, which states that the debarment is 
permanent.
    In fact, the debarment provisions are narrowly drawn to accomplish 
the legitimate government purposes of ensuring the integrity of the 
drug regulatory process and protecting the public health. The debarment 
provisions further the compelling governmental interest of 
``restor[ing] consumer confidence in generic drugs by eradicating the 
widespread corruption in the generic drug approval process.'' (Bae v. 
Shalala, 44 F. 3d 489, 493 (7th Cir. 1995).)

D. Double Jeopardy

    Mr. Bhutani asserts that as he has already been convicted and 
sentenced for his actions, further punishment in the form of a 
permanent debarment 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. Bhutani relies on U.S. v. Halper, 
490 U.S. 435 (1989), which held that a civil sanction can constitute a 
multiple punishment of the sort prohibited by the Double Jeopardy 
Clause, to argue that permanent debarment is not rationally related to 
any remedial purpose and is disproportionate to damages resulting from 
his violative acts.
    Mr. Bhutani's arguments are unpersuasive. First, ``jeopardy'' 
cannot attach because the effect of section 306(a)(2) of the act is 
remedial, not punitive. As previously stated, the legislative goal of 
this section of the act 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 punitive goal.
    Second, the Supreme Court in Hudson v. United States, 522 U.S. 93 
(1997), in large part disavowed the method of analysis used in Halper 
to determine whether a sanction violates the Double Jeopardy Clause. 
The Court in Hudson stated that the Double Jeopardy Clause protects 
only against the imposition of multiple criminal punishments for the 
same offense in successive proceedings. (Hudson, 522 U.S. at 98-99). It 
does not prohibit the imposition of any additional sanction that could, 
``in common parlance,'' be described as punishment. (Id.) (Internal 
quotation marks and citations omitted).
    The Court added that whether a particular punishment is considered 
criminal or civil is first a matter of statutory construction. (Id.) 
That is, a court first must ask whether the legislature, ``in 
establishing the penalizing mechanism, indicated either expressly or 
impliedly a preference for one label or the other.'' (Id. at 99 
(quoting United States v. Ward, 448 U.S. 242, 248 (1980)).) Moreover, 
where the legislature has indicated an intention to establish a civil 
penalty, a court must inquire further whether the statutory scheme is 
``so punitive either in purpose or effect'' as to ``transform what was 
clearly intended as a civil remedy into a criminal penalty.'' (Id. at 
99 (quoting Rex Trailer Co. v.United States, 350 U.S. 148, 154 
(1956)).)
    The debarment of Mr. Bhutani is not a criminal penalty under 
Hudson. In enacting the GDEA, Congress clearly intended that debarment 
serve as a civil penalty. In Hudson, the Court found ``it significant 
that the authority to issue debarment orders is conferred [by statute] 
upon the `appropriate Federal banking agencies','' holding ``[t]hat 
such [debarment] authority was conferred upon administrative agencies 
is prima facie evidence that Congress intended to provide for a civil 
sanction.'' (Id. at 103 (citations omitted).)
    The GDEA explicitly provides FDA with the authority to permanently 
debar individuals convicted of certain felonies, such as Mr. Bhutani, 
from ``providing services in any capacity to a person that has an 
approved or pending drug product application'' (section 306(a)(2) of 
the act). Thus, under Hudson, the terms of the GDEA are prima facie 
evidence that Congress intended the debarment provisions to be civil in 
nature.
    Under the second prong of Hudson, the debarment authorized by the 
GDEA is not so punitive either in purpose or effect as to transform 
this civil remedy into a criminal penalty. In Hudson, the Court 
considered whether a permanent debarment sanction prohibiting 
participation in any banking activities had such a punitive purpose or 
effect. The Court concluded that there was no evidence to establish 
that the debarment sanction at issue was ``so punitive in form and 
effect as to render [it] criminal despite Congress' intent to the 
contrary.'' (Hudson v. United States, 522 U.S. at 104 (quoting United 
States v. Ursery, 518 U.S. 267, 290 (1996)).) The Court in Hudson 
relied on the analysis of Kennedy v. Mendoza-Martinez, 372 U.S. 144, 
168-169 (1963), in reaching this holding.
    The Hudson court further noted that debarment proceedings have not 
historically been viewed as punishment. (Hudson, 552 U.S. at 104). The 
Court found that ``the [debarment] sanctions imposed do not involve an 
`affirmative disability or restraint, ' as that term is normally 
understood.'' (Id. (quoting Flemming v. Nestor, 363 U.S. 603, 617 
(1960)).) The Court also found that the debarment sanction in the 
banking statute at issue in the Hudson case does not ``come into play 
`only ' on a finding of scienter,'' because willfulness is not a 
prerequisite to the imposition of the debarment sanction. (Id. (quoting 
Kennedy, 372 U.S. at 169).) Likewise, the GDEA does not require a 
finding of willfulness as a prerequisite to imposing debarment. In 
addition, the Court explained that the fact that the conduct for which 
the debarment is imposed may also be criminal is insufficient to render 
the debarment sanctions criminally punitive. (Id.) Finally, and 
significantly, the Court explained that the general deterrence of the 
conduct at issue resulting from an individual debarment is insufficient 
to render the debarment criminal. (Id.) These factors apply as much to 
debarment under the GDEA.
    Furthermore, the GDEA's permanent prohibition on services in any 
capacity to a person with an approved or pending drug product 
application is not excessive in relation to the statute's remedial 
purpose. The Supreme Court has upheld similar statutes which, for 
remedial purposes, impose permanent prohibitions. (See Hudson v.United 
States, 522 U.S. 93 (1997); Hawker v. New York, 170 U.S. 189, 190 
(1898); De Veau v. Braisted, 363 U.S. 144 (1960).)
    The preclusion of Mr. Bhutani from providing any type of service to 
holders of pending or approved drug product applications is not 
excessive in relation to the remedial goals of the GDEA. The D.C. 
Circuit has held that the GDEA's prohibition on services in any 
capacity serves the statute's remedial purpose. (FDA v. DiCola, 77 F. 
3d 504 (D.C. Cir. 1996).) Congress prohibited all services to avoid the 
serious administrative difficulties involved in distinguishing between 
those positions clearly related to drug regulation and those not 
clearly related. (Id. at 507; see also Siegel v. Lyng, 851 F. 2d 412, 
416 (D.C. Cir. 1988).) Furthermore, the GDEA's prohibition ensures that 
the purposes underlying the debarment provisions are not circumvented 
or undermined. (DiCola, 77 F. 3d at 507; see also Farley and Calfee, 
Inc. v. USDA, 941 F. 2d 964, 968 (9th Cir. 1991).) Finally, as

[[Page 70152]]

previously noted, the Supreme Court in Hudson upheld a similar statute 
that, for remedial purposes, imposes a prohibition on participation in 
any banking activity. (See also DiCola, 77 F. 3d at 506-507 (debarment 
of a convicted felon does not violate the Double Jeopardy Clause); 
Manocchio v. Kusserow, 961 F. 2d 1539, 1542 (11th Cir. 1992) (exclusion 
of a physician from the Medicaid program because of a criminal 
conviction does not violate the Double Jeopardy Clause).)
    Under Hudson, debarment under the GDEA is not so punitive either in 
purpose or effect as to render the penalty criminal. Thus, Mr. 
Bhutani's argument that debarment under the GDEA violates the Double 
Jeopardy Clause is unpersuasive.

E. Waiver of Further Remedial, Civil, or Criminal Actions

    Mr. Bhutani maintains that FDA is estopped from seeking to debar 
him because the agency waived additional remedial, civil, or criminal 
actions against him by entering into ``agreements'' with him concerning 
his cooperation in bringing Alra's operations in compliance with FDA 
regulations. Mr. Bhutani also asserts that the proposal to debar is 
punitive rather than remedial. These arguments are also unpersuasive.
    As discussed in section II.D of this document, a debarment is a 
remedial, not punitive, action. Furthermore, Mr. Bhutani's argument 
that FDA is estopped from pursuing further administrative action by 
virtue of prior ``agreements'' is unpersuasive. Mr. Bhutani cites no 
legal authority, and we are unaware of any such authority, that would 
bar FDA from pursuing this appropriate remedial action as mandated by 
the GDEA.

F. ``Clean Hands'' Doctrine

    Mr. Bhutani maintains that he and Alra entered into two agreements 
(a consent agreement and a voluntary agreement) with FDA that he and 
Alra complied with and that FDA was satisfied with. He asserts that 
under Congressional pressure, FDA initiated a seizure action and a 
criminal proceeding against Alra. Mr. Bhutani contends that FDA has 
acted in bad faith and, under the ``clean hands'' doctrine, should not 
be allowed to seek additional remedies and relief. This argument is 
also without merit.
    Under the ``clean hands'' doctrine, a party seeking a judgment is 
not entitled to relief in equity if the person has done anything unfair 
or illegal in relation to the subject of the lawsuit. Precision 
Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U.S. 
806, 814 (1945). FDA has not acted in bad faith with respect to any 
agreements with Mr. Bhutani or Alra. Furthermore, FDA is not seeking 
any judgment or relief in equity against Mr. Bhutani. FDA is applying 
to Mr. Bhutani the statutory requirement regarding mandatory debarment 
of individuals convicted of a felony under Federal law for conduct 
related to the regulation of a drug product under the act. Therefore, 
Mr. Bhutani's argument regarding the ``clean hands'' doctrine is 
without merit.

G. Estoppel by Laches

    Mr. Bhutani maintains that FDA is estopped from taking this 
regulatory action due to an ``unreasonable amount of time that has 
elapsed.'' He cites Costello v. U.S., 365 U.S. 265 (1961), in support 
of his contention. Costello involved an individual whose U.S. 
naturalization was revoked 27 years after his application. The Costello 
case is not in any way relevant or analogous to the circumstances at 
issue here, but even if it were, the Court's holding that the 
petitioner's rights were not violated by a 27-year delay in initiating 
citizenship revocation undermines, as opposed to supports, Mr. 
Bhutani's argument. The Court cited, as is the case here, the 
availability of accurate records and documents attesting to the 
petitioner's misdeeds (Id. at 282-283).
    FDA initiated administrative action to debar Mr. Bhutani in a 
timely fashion. Section 306(l)(2) of the act provides a 5-year window 
from the date of conviction for the agency to initiate the debarment 
process. Mr. Bhutani's conviction was reinstated on April 29, 1999. The 
agency issued a proposal to debar on February 6, 2003, within the 5-
year statutory window. Therefore, Mr. Bhutani's assertion is 
unpersuasive.

H. Other Arguments

    Finally, Mr. Bhutani argues that FDA must consider a number of 
factors in this debarment proceeding, including the nature and 
seriousness of the offense; management participation in the offense; 
voluntary steps taken to minimize the impact of the offense on the 
public; changes in ownership, management, or operations that have 
corrected the cause of the offense and decreased the likelihood of a 
recurrence; evidence that current production of drugs subject to 
abbreviated drug applications and all pending abbreviated drug 
applications are free of fraud or material false statements; and prior 
convictions. Again, the only relevant fact under section 306(a)(2) of 
the act is whether Mr. Bhutani was convicted of a felony under Federal 
law for conduct related to the regulation of a drug product. Therefore, 
Mr. Bhutani's argument that FDA must consider other factors is without 
merit.

III. Denial of Hearing

    In his requests for a hearing, Mr. Bhutani does not present any 
information showing there is a genuine and substantial issue of fact 
requiring a hearing. Mr. Bhutani does not dispute that he pled guilty 
to one count of wire fraud and that he was found guilty of seven other 
counts, all felonies under Federal law. Nor does he dispute that he was 
convicted of felonies that were clearly related to the regulation of a 
drug product under the act. The facts underlying Mr. Bhutani's 
convictions have been established by his convictions and, therefore, 
are not at issue. Thus, FDA finds that Mr. Bhutani has failed to 
identify any genuine and substantial issue of fact requiring a hearing. 
In addition, Mr. Bhutani's legal arguments do not create a basis for a 
hearing and, in any event, are unpersuasive. Accordingly, FDA denies 
Mr. Bhutani's request for a hearing.

IV. Findings and Order

    Therefore, the Associate Commissioner for Regulatory Affairs, under 
section 306(a) of the act and under authority delegated to him, finds 
that Mr. Baldev Bhutani has been convicted of a felony under Federal 
law for conduct relating to the regulation of a drug product under the 
act (Section 306(a)(2)(B)) of the act).
    As a result of the foregoing findings, Mr. Baldev Raj Bhutani is 
permanently debarred from providing services in any capacity to a 
person with an approved or pending drug product application under 
sections 505, 512, or 802 of the act (21 U.S.C. 355, 360b, or 382), or 
under section 351 of the Public Health Service Act (42 U.S.C. 262), 
effective (see DATES) (sections 306(c)(1)(B) and (c)(2)(A)(iii) 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 Mr. 
Bhutani 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 Mr. Bhutani, during the period of his 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 ANDAs submitted by or with the assistance of Mr. 
Bhutani during the period of his debarment.

[[Page 70153]]

    We note that Mr. Bhutani has petitioned the U.S. Supreme Court for 
writ of certiorari of the Seventh Circuit's decision in his case. 
Should the outcome of further judicial proceeding result in Mr. 
Bhutani's conviction being reversed, under section 306(d)(3)(B)(i) of 
the act, the order of debarment will be withdrawn. Mr. Bhutani may file 
an application to terminate his debarment, under 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. 2002N-
0291 and sent to the Division of Dockets Management (see ADDRESSES). 
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(f). Publicly available submissions may be seen in the Division of 
Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

    Dated: November 24, 2004.
John M. Taylor,
Associate Commissioner for Regulatory Affairs.
[FR Doc. 04-26532 Filed 12-1-04; 8:45 am]

BILLING CODE 4160-01-S