As we’ve been following since January 2012, the DOJ announced yesterday the final settlement with generic drug manufacturer Ranbaxy, bringing to a close the DOJ’s investigation of claims that the company introduced certain batches of adulterated drugs into the U.S. marketplace years ago. Ranbaxy is probably best known for the sale of the generic version of the blockbuster drug Lipitor. The $500 million settlement is being touted as the “largest drug safety settlement to date.”
As part of the settlement, Ranbaxy pled guilty to three felony Food, Drug and Cosmetic Act counts and four felony counts of knowingly making material false statements to the FDA, according to the DOJ press release. According to Rod J. Rosenstein, U.S. Attorney for the District of Maryland, “This is the largest false claims case ever prosecuted in the District of Maryland, and the nation’s largest financial penalty paid by a generic pharmaceutical company for FDCA violations.” As we highlighted in our previous post, the international component of this investigation — all manufacturing facilities at issue were located in India — seem particularly noteworthy and suggest a more aggressive international stance on the part of the FDA. As acting assistant attorney general for the DOJ Civil Division, Stuart F. Delery, stated, “We will continue to work with our law-enforcement partners to ensure that all manufacturers of drugs approved by the FDA for sale in the United States, both domestic and foreign, follow the FDA guidelines that protect all of us.”
Ranbaxy will pay a criminal fine and forfeiture totaling $150 million and civil settlement of $350 million, $231.8 million of which will go to the federal government, $118.2 million to the participating states, and approximately $48.6 to the qui tam whistleblower, a former Ranbaxy executive. Whether the Ranbaxy settlement indicates a growing trend in broad-reaching international enforcement of FDA violations remains to be seen, but it is likely that the DOJ and FDA will continue to work together if these are the results they can achieve. Companies thus should be ever more vigilant in their risk management assessments and consider proactive measures to eliminate, or at least reduce, their exposure to aggressive government FCA actions.
Proposed legislation this past Friday from the Senate Health Committee would provide the FDA with greater authority over certain compounding pharmacies, helping clarify the legal landscape around the FDA’s authority over the industry (as we posited may happen here and here). The proposal comes in response to vocal criticism from members of Congress that the agency failed to act aggressively enough in its oversight of compounding in the wake of the meningitis outbreak last fall that killed more than 50 people and sickened more than 700. The outbreak, linked to tainted steroids distributed by the New England Compounding Center, led to calls from FDA Commissioner Hamburg for legislation to clarify the agency’s role. See our coverage of this issue as it developed here, here and here. Continue reading
Today, the Supreme Court heard arguments in FTC v. Activis, Inc. on whether reverse settlement or so-called “pay for delay” agreements between branded and generic drug manufacturers violate U.S. antitrust laws. Hinting at a ruling that could have significant legal and financial implications for the pharmaceutical industry, the justices seemed skeptical of the legality of such agreements. Continue reading
In a significant decision, the Supreme Court of Alabama ruled Friday that “it is not fundamentally unfair to hold the brand-name manufacturer liable for warnings on a product it did not produce[.]“ Rejecting the majority approach, Alabama now joins only two other courts — California and Vermont — in holding branded manufacturers liable for claims based on a generic drug. Continue reading
Yesterday, Representatives Ed Markey, Jan Schakowsky and Earl Blumenauer wrote FDA commissioner Margaret Hamburg demanding that the agency investigate popular hair straightening products such as the popular Brazilian Blowout. The letter urges the commissioner to protect salon workers and consumers from alleged adverse health concerns resulting from the products and toxic fumes which contain formaldehyde, classified in the U.S. as a known carcinogen. The classification of formaldehyde seems to be making the news recently, as Law360 reported today that an EU chemicals watchdog panel recently proposed classifying the substance as a presumed human carcinogen, a less severe rating than that adopted by the U.S.
The concerns surrounding the Brazilian Blowout hair straightening products first began in May 2011, when the same representatives first contacted the FDA requesting a voluntary recall of the products, institute better labeling practices (one of the Brazilian Blowout products studied had been marketed as formaldehyde free although studies showed possible formaldehyde levels between 4-10%), and to conduct a review of whether formaldehyde-containing products should be banned due to health risks. In August 2011, the FDA warned the maker of one Brazilian Blowout treatment that its product was misbranded and falsely promoted the solution as formaldehyde-free. In response, the company sent letters to salons reaffirming the safety of its products and released another product that it claims does not release formaldehyde. In January 2012, the same company settled with the California Attorney General’s office and was required to stop advertising its product as formaldehyde-free and to place warning stickers on its products.
Despite being a $50 billion industry, cosmetic products are amongst the least regulated consumer products available on the market. Under the Food, Drug and Cosmetic Act, cosmetic products and ingredients do not require FDA approval before they go on the market. Instead, the agency only monitors their safety through a voluntary cosmetic registration program database, inspections, product surveys, a cosmetic ingredient review expert panel, and consumer reports. Given recent criticism over the FDA’s failure to adequately oversee and regulate the compounding industry, it remains to be seen whether other industries — like cosmetics — could be next. Regardless, the Congressman are demanding an answer from the FDA by December 21 on the Brazilian Blowout issue and what steps the agency is taking to “protect the public health.” We’ll continue to monitor these developments here at the Product Liability Monitor.